Research Report - icmab.org.bd

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Research Report

On

“Healing the Economic Injuries Caused by Deadly

COVID-19 Pandemic”

This research is undertaken and funded by the Institute of Cost and

Management Accountants of Bangladesh.

June 10, 2021

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Table of Contents

Contents Page

President’s Message 03

About ICMAB 04

Preface 05

Acknowledgement 06

Profile of the Research Team 07-12

Executive Summary 13-17

Research Project Title 1: “Healing the Economic Injuries Caused by Deadly Covid-

19 Pandemic” Sector: Agriculture

18-38


19 Pandemic” Sector: Ready-Made Garments (RMG)

39-48


19 Pandemic”

49-62

Sectors:

A. Capital market

B. Trade & commerce

C. Supply chain system

D. Computer software business & others

E. Entertainment industries

F. Hotels, motels, resorts, shops & establishments

G. Private hospitals

H. Public transport

I. Railways

J. Waterways

K. Electronic & print media

L. Small & informal micro business

M. Tailoring shops

N. Barber shops

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President’s Message

The Institute of Cost and Management Accountants of

Bangladesh (ICMAB) is the national body of the professional

Cost and Management Accountants of Bangladesh established

with the prime objective of promoting and regulating the Cost

and Management Accountancy profession in the country. The

Institute offers education and training to the students

interested to pursue career in this field and provides highly

recognized CMA degree on fulfillment of requisite

qualification. The Institute undertakes research on a

continuous basis on emerging issues in the relevant fields to

make the knowledge of its members up-to-date. In this endeavor, the Institute has formed a

‘Research and Development Committee’ which is constantly working to conduct and support

high quality research in the relevant fields.

We all know that COVID-19 has drastically disrupted several aspects of our life, business,

national economy, and the global economy. Parallel to other economies across the globe, the

economy of Bangladesh has also been severely affected by this Pandemic. Moreover, as the

evolution of this disease and its economic impact is highly uncertain, it is hardly possible for the

policymakers to formulate appropriate macroeconomic policies to combat the Pandemic.

Agriculture, industry and services are the three major sectors of Bangladesh economy. I am

really pleased to learn that this research has focused on the extent of losses caused by the

‘Deadly Covid-19 Pandemic’ by all these sectors and suggested possible remedies to heal the

economic injuries caused by this pandemic.

I expressed my heartfelt thanks to all the members of the research committee for accepting

tremendous pressures to complete this research. I eagerly look forward to see more researches on

emerging issues like the present one.

Abu Bakar Siddique FCMA

President

The Institute of Cost and Management Accountants of Bangladesh

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About ICMAB

The Institute of Cost and Management Accountants of Bangladesh (ICMAB) is the national body

of the professional Cost and Management Accountants of Bangladesh. Established with the

prime objective of promoting and regulating the Cost and Management Accounting profession in

the country, the Institute offers education and training to the students interested to pursue career

in this field and provides highly recognized CMA degree on fulfillment of requisite qualification.

ICMAB is a statutory organization constituted by the Government under The Cost and

Management Accountants Ordinance 1977 (replaced by the Cost and Management Accountants

Act 2018) and regulated under the Cost and Management Accountants Regulations 1980. The

Ministry of Commerce, Government of the People’s Republic of Bangladesh is the

Administrative Ministry of the Institute. It is a member of leading regional and global accounting

bodies including International Federation of Accountants (IFAC), Confederation of Asian and

Pacific Accountants (CAPA), and South Asian Federation of Accountants (SAFA). Moreover,

The Institute has strategic partnership with the Chartered Institute of Management Accountants

(CIMA), and the Chartered Institute of Public Finance and Accountancy (CIPFA).

Established with the mission to develop, equip and promote Cost and Management Accounting

profession by maintaining highest professional standard, the Institute strives to help Bangladesh

become an industrialized nation by promoting and regulating Cost and Management Accounting

profession to enhance economic competitiveness and quality of life. The Institute undertakes

research in relevant fields and is the sole authority to issue practicing license to its members.

The Institute is presently being governed by a Council which consists of 16 Fellow Members of

ICMAB (including one regional representative) elected by the members of the Institute and 5

nominees from the Government of Bangladesh as prescribed in the Cost and Management

Accountants Act, 2018. The Council is elected for a period of three years. Every year one

President, two Vice-Presidents, one Secretary and one Treasurer are elected as office bearers

from amongst the Council Members. The day to day administrative affairs of the Institute is,

however, managed by a team of fully employed executives headed by an Executive Director who

acts as the Chief Executive Officer (CEO).

To allow students to study from several remote areas of the country and overseas, the Institute

runs three branches (Dhaka, Khulna, Chattogram), three study centers (Rajshahi, Cumilla,

Jashore), and four overseas chapters (Canada, Saudi Arabia (KSA), UK, Australia).

The institute publishes a bi-monthly Journal (THE COST AND MANAGEMENT), newsletter,

and issues professional standards (Bangladesh Cost Accounting Standards) to enrich and update

its members and make them capable providers of rich and strategic information to the top

management team. Additionally, to make the CMAs lifetime professional, the Institute regularly

organizes continuing professional development (CPD) programs in the form of workshop,

seminars, conferences and discussion sessions.

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Preface

The 17th Council of the Institute in its 4th meeting on June 17, 2020 formed a Committee with the

following members to conduct a research work titled “Healing the Economic Injuries Caused by

Deadly COVID-19 Pandemic”. The Council has also given responsibilities to monitor the

research work to Mr. Abu Sayed Md. Shaykhul Islam FCMA, Past President & Council Member

of ICMAB.

The members of the research Committee are as follows:

Serial

No

Name of the Committee Member ICMAB Membership

No

Designation

1 Mr. Naba Krishna Muni FCMA F-0302 Member

2 Mr. RoomeeTarequeMoudud FCMA F-0490 Member

3 Mr. Md. Torequl Islam FCMA F-0893 Member

4 Mr. Md. Mamunur Rashid FCMA F-1045 Member

The research titled “Healing of Economic Injuries caused by deadly COVID-19 PANDEMIC in

Selected Industry Sub-Sectors of Bangladesh” was a challenging assignment. But we tried our

best to cover the contents and industry sub-sectors as much as possible. The following sectors are

included:

A. AGRICULTURAL SECTOR

B. READY-MADE GARMENTS SECTOR

C. CAPITAL MARKET

D. TRADE & COMMERCE

E. SUPPLY CHAIN SYSTEM

F. COMPUTER SOFTWARE BUSINESS & OTHERS

G. ENTERTAINMENT INDUSTRIES

H. HOTELS, MOTELS, RESORTS, SHOPS & ESTABLISHMENTS

I. PRIVATE HOSPITALS

J. PUBLIC TRANSPORT

K. RAILWAYS

L. WATERWAYS

M. ELECTRONIC & PRINT MEDIA

N. SMALL & INFORMAL MICRO BUSINESS

O. TAILORING SJOPS

P. BARBER SHOPS

We are indeed grateful to the 17th Council of ICMAB who trusted upon us. We as a team worked

together and finally we have completed the assigned task. Development is a continuous process

and we believe there are rooms for improvement.

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Acknowledgement

Covid-19 has changed everything on this planet and severely injured the personal life, social life,

national economy and global economy. Nobody knows how long it will bleed human life and

national as well as global economy. However, it is certain that the world's human beings will

overcome this devastating situation one day by the grace of Almighty Allah. Under the said

situation, doing research on the impacts on the national economy caused due to Covid-19 is a

challenging task on one hand and a matter of professional responsibility on the other.

The Institute of Cost and Management Accountants of Bangladesh (ICMAB) has a long history

of conducting and supporting research on emerging issues. In fact, ICMAB has formed a

separate committee to look after and support research activities of professional interest and

obligation. This research report is the outcome of its ongoing research agenda.

A dedicated team of professional Cost and Management Accountants have done this

challenging research in spite of various limitations. The research team expresses their heartfelt

thanks to the Research & Development Committee and the present council of ICMAB for

extending immense support to conduct the said research.

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PROFILE OF RESEARCH TEAM

PEN PROFILE

OF

Mr. Abu Sayed Md. Shaykhul Islam FCMA

KEY QUALIFICATION

Mr. Abu Sayed Md. Shaykhul Islam FCMA is a ‘Professional in Businesses’. He has more than

38 years of experience of serving the corporate world both at home and abroad. He started his

career with Square Pharmaceuticals Limited as an officer and served different business

conglomerates as Manager, Chief Accountant, Finance Director, CFO and CEO. Among others,

he served leading local business conglomerates including Beximco, Concord, Radiance,

PARTEX, Rupayan and Lusaka Group; and Bangladesh Freedom Fighters’ Welfare Trust and

National Tea Company Limited and in overseas, he served National Factory for Air

Conditioners, Riyadh, Saudi Arabia. At present, he is working as a Financial Adviser and

Management Consultant. At present, he is working as “Chief Consultant-Finance & Accounts”

of Cityscape Group. He is also working as a Director and Convener of the Board Audit

Committee in the Board of Directors of government owned Dhaka Power Distribution Company

Limited (DPDC).

As a professional Cost and Management Accountant, Mr. Shaykhul has been contributing a lot to

develop and promote the financial management and accountancy profession. He is a Past

President of ICMAB (The Institute of Cost and Management Accountants of Bangladesh). He is

also a member of the ‘Public Sector Financial Management Committee’ of CAPA

(Confederation of Asian and Pacific Accountants) and ‘Committee on Education, Training and

CPD’ of SAFA (South Asian Federation of Accountants). As the representative of ICMAB, Mr.

Shaykhul Islam worked as a Director in the Board of Directors of Bangladesh Diesel Plant

(managed by Bangladesh Army), Narayanganj Dockyard and Khulna Shipyard (managed by

Bangladesh Navy); and Bangladesh Institute of Capital Market (BICM) controlled by

Bangladesh Securities and Exchange Commission (BSEC).

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Mr. Abu Sayed Md. Shaykhul Islam FCMA authored four professional books and these are:

‘Basic Issues of Private Investment and Business-Bangladesh Perspective’(Second

Edition)published in February 2021,‘Basic Issues of Private Investment and Business-

Bangladesh Perspective’(First Edition) published in August 2016, ‘Doing Business in

Bangladesh’ published in March 2005 and ‘Services of a Company Secretary’ published in April

1996.He has also published a number of articles on business, finance, IFRS, public financial

management (PFM), budget, taxation, consumer rights, FDI, public private partnership, company

affairs, sustainable development goals (SDGs) and other socio-economic issues in English and

‘Bangla’ language in various national dailies and professional journals both at home and abroad.

He has also presented a number of papers in national and international seminars and conferences.

Mr. Shaykhul is a widely travelled person. He has visited USA (New York, Washington, Atlantic

City and Orlando), UK (London, Birmingham and Oxford), Germany (Berlin, Hamburg and

Bremerhaven), Canada (Toronto and Ottawa), France (Paris), Spain (Zaragoza and Barcelona),

Saudi Arabia (Riyadh, Jeddah, Mecca and Medina), Pakistan (Karachi), Sri Lanka, Nepal,

Maldives, India (Kolkata, Delhi, Mumbai and Bangalore), United Arab Emirates, Thailand,

Indonesia, Malaysia, China, South Korea and Singapore.

Mr. Islam’s spouse is a house-wife. His son is a CPA (Chartered Professional Accountant) living

in Canada and the daughter is a physician by profession (MBBS).

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PEN PROFILE

OF

MR. NABA KRISHNA MUNI FCMA

KEY QUALIFICATION Mr. Naba Krishna Muni is a senior project management, organizational capacity building and

assessment expert and trainer, who has more than 30 years of experience in designing and

implementing best practice interventions and strengthening organizational and financial

management and sustainability. He worked on multiple Government projects funded by various

donors funded projects in Bangladesh and has gained substantial experience, and a wide network

of professional contacts, over the course of his career.

Mr. Muni is presently working with EVM Project of Bangladesh Election Commission as Project

Management Consultant. Earlier, he has been responsible for leading the Capacity Development

component of IBTCI/ ACME’s contract. His key task under this contract has been building and

maintaining the network between IBTCI/ ACME senior technical experts, the USAID Mission’s

development partners, and USAID management and GoB ministries. He has technical expertise

in managing projects and organizational capacity building and health system strengthening in the

public and private sector business enterprises, with a strong background in organizational and

financial management and business. With a strong commitment to team work and collaboration,

Mr. Muni has worked closely with key stakeholders in developing and accessing capacity

building training programs, including public and private sector actors, local and international

NGOs, and the donor community. He is also skilled in a wide range of research techniques and

has conducted qualitative research on alternative health service delivery options for the Urban

Family Health Partnership, which contributed to the USAID-funded Smiling Sun Franchising

Program. He worked under NGO model, Private Sector Enterprise Model and Cooperative

Model with USAID/B UFHP, NSDP, NHSDP, RPPR, USAID MIDAS project and ACME

projects both cooperating agreement and contract funding modality of USAID.

Mr. Muni is an honors and post graduate in accounting, a UK Chartered Management

Accountant, a FCMA, an MBA from IBA, a LLB and a certified Capacity Building International

Trainer by WB/ADB over a career span of more than 30 years in the field of management

accounting, management consultancy and capacity building training management. He worked

with variety of organizations such as: government, bi-lateral and multi-lateral donor agencies,

INGOs and NGOs in grass root level. Three categories of organizations, he served: (a)

Development Partners: USAID, CARE International, UNICEF, DFID, CIDA, SIDA, EU, The

World Bank, The Asian Development Bank; (b) Private entities (national/international): PI,

Emerging Markets Group/DTTEM, RTI, HLSP, Save the Children, USA, IntraHealth, Pathfinder

International, BCCP, URC, JSI, MIDAS, SRGB, Hoda Vasi Chowdhury & Co, TFIPP, UFHP,

NSDP; and (c) Government entities: MOHFW, MOI, MOE, LGRD, MOWCA and MOA.

Mr. Muni has been travelled widely. He is a motivational speaker and trainer having

management consulting and training related working experience in USA, Afghanistan, Thailand,

India and Bangladesh.

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KEY QUALIFICATION

Mr. R. Tareque Moudud is a Fellow member of the Institute. He qualified in 1986 from the

Chartered Institute of Management Accountants, UK and is a Member of the Institute. Mr.

Moudud has worked in various sectors of the economy.

Mr. Moudud started his professional career by working in pharmaceutical manufacturing at G.D.

Searle Ltd., a company based in the UK. Subsequently, after returning to Bangladesh, he worked

for a foreign funded international development organization funded by European donor agencies.

His designation was Management Accountant. His responsibilities included internal audit,

computerization of the Organization's accounting system and financial evaluation of its

employment/income generating projects.

In 1997, Mr. Moudud joined the Securities & Exchange Commission (SEC) Bangladesh as its

Executive Director. Main areas of work included corporate finance, vetting of IPO's developing

concepts for introducing new financial "products", Registration and licensing of Merchant Banks

and monitoring the workings of brokerage firms.

Since January 2005 Mr. Moudud has been employed by a private University, both as a Faculty as

well as a Director (since April 2006).

Mr. R. Tareque Moudud FCMA has also worked as a financial consultant on different projects of

the Asian Development Bank (ADB).

PEN PROFILE

OF

Mr. R. Tareque Moudud FCMA

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PEN PROFILE

OF

Mr. Md. TOREQUL Islam, FCMA, CIMA Adv Dip MA (UK), ITP

KEY QUALIFICATION Mr. Md. TOREQUL Islam is a Fellow member of the Institute of Cost and Management Accountants of

Bangladesh (FCMA) and CIMA Adv Dip MA (UK). He did his B.COM (Hon’s) & Masters in

Accounting from NU. He is also an Income Tax Practitioner (ITP) at Dhaka Taxes Bar and VAT

Consultant.

He is the Managing Director of VanGuard Consulting PLC which is the largest Management Accounting

Company in South Asia and one of the sponsor director and Chairman of Tacit Ltd.

Mr. Md. TOREQUL Islam is highly experienced financial professional in planning, implementing, and

building financial health of the organization. Experienced in handling the entire financial activities and

guiding the finance team with outstanding leadership and demonstrated track record of improving

financial performance of the organization, optimize productivity and internal control. In his16 years of

professional experiences he served in City Group, Walton Group, Ananda Group, FedEx, Padma Group

of Converters, Padakhep Manabik Unnayan Kendra those includes various industries like consumer

goods, foods, steel, printing & packaging, shipping, shipbuilding, power & energy, financials, shares and

securities, insurance, media, Healthcare, automobiles, consumer electronics, household goods, technology

hardware, electronic equipment, heavy engineering, textiles, real estate, services, intermediate

pharmaceutical products manufacturers, plastic, ICT, NGO.

He started his career as Finance Execute then he rendered his services in different capacity as CFO, GM-

A&F, Deputy Director in Supply Chain Management, Deputy Director in Group Finance, Head of

Costing & Inventory, Head of Factory Accounts, Manager Finance & Accounts, Asst. Manager - Cost &

Budget, Asst. Manager - Finance & Accounts, Executive in Cost & Budget Department.

He has expertise on Strategic Tax & VAT Planning &Management, Business-functional Strategic

Planning, Process design and Productivity improvement, Profitability, Cost and Sensitivity Analysis,

Budgeting & Budgetary Control, Business Process Re-engineering and automation, International (USD)

Financing, Financial Modeling, Project proposal writing, Financial feasibility, Financial, Social,

Environmental due diligence and Compliance, Standard Costing & Variance Analysis, Direct, Absorption

Costing & Pricing, Business Valuation, Consolidated Financial Statement, Compliance Management.

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PEN PROFILE

OF

Mr. Md. Mamunur Rashid FCMA

KEY QUALIFICATION

Mr. Md. Mamunur Rashid is a Fellow member of the Institute of Cost and Management

Accountants of Bangladesh. Currently, he is serving Stamford University Bangladesh as an

Assistant Professor’ at the Department of Business Administration. He is also performing the

role of Head of Accounting & Information Systems in the Department of Business

Administration. He completed BBA and MBA major in Accounting and Information Systems

from the University of Rajshahi (Bangladesh). He was awarded with the Agrani Bank Gold

Medal for securing the first position in the Faculty of Business Studies. He also secured a

position in the Deans Merit list in BBA and both the Deans Merit list and Deans Honors list in

MBA. He has passed CMA final examination-December 2014 from the Institute of Cost and

Management Accountants of Bangladesh (ICMAB). He is now pursuing his PhD on Strategic

Management Accounting in the Department of Accounting & Information Systems of University

of Dhaka, Bangladesh.

He has published research papers in a number of reputed international journals [e.g., Scopus

indexed, Australian Business Deans Council (ABDC) ranked, Scimago ranked, and The

Association of Business School-ABS (UK) ranked Journals] including Journal of Accounting &

Organizational Change, Corporate Governance, Journal of Accounting in Emerging Economies,

and Journal of Financial Reporting and Accounting.

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EXECUTIVE SUMMARY

The research titled “Healing of Economic Injuries caused by deadly COVID-19 PANDEMIC in

Selected Industry Sub-Sectors of Bangladesh” was a challenging assignment. But we tried our

best to cover the contents and industry sub-sectors as much as possible. The report is presented

in three different sections. The first section presents the impact of deadly COVID-19 Pandemic

on agricultural sector and suggests several remedial actions that the policy makers can undertake

to heal the economic injuries experienced by the sector. The second part of the report focuses on

the impact of deadly Covid-19 Pandemic on Ready-Made Garments sector and suggests several

remedies to heal the economic injuries caused by the Pandemic. The final section concentrates

on the economic impact of the Pandemic on all other sectors namely Capital market, Trade &

commerce, Supply chain system, Computer software business & others, Entertainment

industries, Hotels, motels, resorts, shops & establishments, Private hospitals, Public transport,

Railways, Waterways, Electronic & print media, Small & informal micro business, Tailoring

shops, and Barber shops.

1. The policy recommendations relating to Research Project Title 1 (Agriculture) is given

below:

Farmers’ recommendations:

▪ Ensuring legal prices of agriculture produces

▪ Uninterrupted transportation facilities

▪ Availability of agricultural inputs at reasonable prices

▪ Financial assistance to continue production

▪ Migration of labor from surplus to deficit areas

Agro-based businesses’ recommendations:

▪ Financial assistance to continue payment of fixed costs

▪ Ensuring safe work environment to continue operation

▪ Uninterrupted transportation facility

▪ Enhancing farmers’ ability to pay inputs price

▪ Monitoring of market systems to control dishonest hoarders

ICMAB’s recommendations:

Taking the unique nature of agriculture sector into account, we suggest the following steps to be

taken by the policy makers in healing the economic injuries caused by the ongoing ‘COVID-19

Pandemic’, specifically to avert further risks to Bangladesh’s food systems:

▪ Avoiding trade restrictions for the agents associated with agricultural food supply chain at

the best possible level;

▪ Allow transportation of agricultural products from rural to urban areas to ensure the mutual

benefits of farmers and consumers;

▪ Ensure uninterrupted flow of essential inputs to farmers through the regular market systems

at reasonable prices;

▪ A strong monitoring cell should actively oversee the market systems to assure legal prices of

agricultural produces for farmers as well as reasonable prices of essential inputs such as

seeds, fertilizers, pesticides and vaccinations;

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▪ Agricultural labourers and poor farmers experiencing extreme food shortage should be

supplied with essential foods to ensure their survival;

▪ Allot substantial incentives for the financial institutions that support agricultural activities so

that they can support financially farmers and others involved in the channel to survive;

▪ Tax waiver and subsidy on the imports of essential foods, agricultural machineries and inputs

may further motivate the key players in this sector to continue their role in meeting foods

demands of the country;

▪ Farmers and exporters of agricultural products specifically vegetables, crab and shrimps

cultivators and exporters need enhanced financial supports to survive since the closure of

borders and port significantly and adversely affected their sales volume and prices;

▪ Forming specialized monitoring cell by the ministry of agriculture at the root level to reach

marginal and poor farmers with necessary financial and input supports specifically who are

unaware of banking activities and have no access to such facilities;

▪ Allocating short-term as well as long-term loan with zero to five percent interest rate to those

agricultural entrepreneurs who are engaged in manufacturing agricultural inputs such as

seeds, poultry feeds, and other inputs, and experienced postpone of production activities or

substantial reduction in the production and sales volume due to COVID-19 Pandemic. The

amount of funds allocated to these firms should enable them to continue salary payment to

their workers as well as to incur other maintenance costs such as rent, utility bills and other

fixed costs;

▪ Migration of agricultural workers from surplus zone to deficit zone may further boost up the

quality of produce as well as reduce the rate of food lost and waste. However, due care needs

to be taken regarding the maintenance of social distancing to avoid the spread up of the

pandemic;

▪ Lobbying/tactful discussion with international development partners such as FAO (Food and

Agriculture Organization), UNDP (United Nation Development Program), IMF

(International Monetary Fund), and the World Bank to find ways along with assistance to

combat the emerged adverse effect on agriculture sector;

2. The policy recommendations relating to Research Project Title 2 (Ready-Made

Garments) is given below:

Bangladesh is largely dependent on RMG exports and remittances from workers abroad. In

the current pandemic, RMG exports have been hit badly due to fall in demand in the buying

countries and it is not likely to improve anytime soon. Subsidies and assistances can work

to save a situation, but these cannot be continued indefinitely.

We suggest not only diversifying our exports, but also creating new business opportunities

serving both the local and the international markets and in the process also creating new

jobs.

a. Software and IT exports

The country over the past decade has developed an economic structure which has

been showing healthy figures—albeit in, mainly the RMG sector. In order to take the

country further, the country needs to build on the successes it has achieved. New

export earners need to be identified and developed so that our foreign exchange

earnings are not limited to conventional, low value addition products. The country is

now poised to move into more “high tech” sectors, such as software and IT exports.

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To this end the Government, has over the years, been working on developing the

digital sector, with specific focus on the export of computer software and IT exports.

And so, with improved infrastructural support, Bangladesh is gradually becoming a

significant software exporter. Spurred on by the initiatives taken by the Government,

software companies have entered into the global market and have already made their

presence felt in over 80 countries. Bangladesh is already gaining a reputation for

supplying quality software products. Earnings from the export of software and IT

support have already reached about USD 1 billion. The government has plans to

expand this sector to increase exports to about USD 5 billion by 2021, and creating

around 2 million jobs.

This is an area which needs to be taken forward, so that irrespective of the pandemic,

a new window of opportunity can open to boost our foreign earnings potentials. This

will require retraining job seekers to master new skills. All this will require support

from the Government. The Government already has a policy for the development of

the sector. Work on this must now be accelerated so that in the coming years the IT

sector can become one of the leading earners of foreign exchange

b. Business Process Outsourcing (BPO)

This is a new sector which has seen tremendous growth worldwide, given the strong

IT and internet backbone which most countries enjoy. Many companies now

outsource some of their functions to BPO companies, which provide this service for a

fee. Globally this industry is expected to reach about USD 406 billion by 2027 and it

is gaining popularity in sectors such as banking, financial services, utilities,

education, transportation, tourism, construction, etc.

So how does Bangladesh fits into this? Growth in the country’s BPO sector has

shown dramatic increase over the past decade and whereas in 2009 the industry

employed only 300 people, in 2019 this has increased to about 50,000 working in 120

companies. Volume of BPO business in Bangladesh has been growing by about 20

percent year-on-year and in 2019 this was about $300 million. Given the performance

of the Bangladeshi BPO sector many, many commercial companies abroad are now

looking to outsource their work to Bangladesh rather than to India, China or

Philippines, due to the rising costs in these places and due to the fact that

Bangladesh's BPO sector has been able to provide the same quality, if not better, as

that provided by the competitors in India or Philippines.

The Government needs to work with the major companies in the sector, so that this

can be groomed up as an important source of employment and earnings for the

country.

c. Electronic commerce ---online business

Names such as Daraz.com, Chaldal.com and many other electronic or “e-commerce”

companies have now become common household names. This is the next generation

of businesses that is now dominating the country’s business scenario. Riding on the

back of an efficient internet backbone, this sector made a quantum leap in 2017,

increasing its volume by about 70% compared to the previous year. The country’s

(electronic) e-commerce business currently stands at USD 1.6 billion and is projected

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to increase to USD 3 billion by 2023. Its development has been facilitated by the

presence of Mobile Financial Service (MFS) as the mode of payment (bKash, Rocket

etc.). Complimenting each other’s business, online shopping cut down on imports

matched by online payments could well be the dominant norm in the years to come.

Here too, the Government could play an important role by making the operations of

these businesses more cost effective, so that online shopping can really establish itself

as a frontline business creating many jobs in the economy

d. Bangladesh’s electronics industry

Till recently a relatively unknown sector, the manufacturing of household electronic

goods has been witnessing rapid growth over the past few years. Local manufacturers

such as “Walton”, “Transtec” and others have now become household names

producing refrigerators, mobiles, televisions etc.

Apart from being an import substitution, the industry also exports some of the

electronic items. Total export of the sector was USD 59.52 million in 2015, and

estimated to be about USD 430 million during 2020.

Here too, the Government needs to facilitate this to be a future export earner and

import substitute without any compromise in quality. JV arrangements with foreign

companies need to be set up, by inviting Foreign Direct Investment (FDI) including

technical expertise to assist the nascent industry. Tax and other financial incentives

may be considered to assist this industry so that in the years to come it can not only

earn foreign exchange but also cut down on imports thereby being a net gain for the

economy while at the same time creating new jobs

To sum up, Bangladesh like many other countries is right now going through very

turbulent days arising out the pandemic. Nevertheless, plans need to be developed so

that the country can recover from lost earnings. It is also giving the economic

planners a chance to have a relook at some of the economic policies to realign them

with future requirements in view of the changed circumstances, arising from loss in

the RMG sector and other foreign exchange earning activities.

3. The policy recommendations relating to Research Project Title 3 (All other sectors) are

given below:

Bangladesh’s economy will be significantly impacted by the COVID-19 pandemic. The

decline in national and global demand for manufactured goods, particularly in the garment

sector, risks creating unemployment and deepen poverty. The urban poor will be hardest hit

while the number of additional poor will be higher in rural areas. The national shutdown

will impact private consumption. While growth is expected to recover over the medium

term, downside risks remain, particularly from a domestic outbreak of COVID-19 and

fragilities in the financial sector.

The impact of the pandemic will hit hard low-income people, especially informal workers

in the hospitality, retail trade, and transport sectors who have limited or no access to

healthcare or social safety nets. The report notes that the COVID-19 shock will likely

reinforce inequality in South Asia. As played out across the region, the sudden and large-

scale loss of low paid work has driven a mass exodus of migrant workers from cities to

rural areas, spiking fear that many of them will fall back into poverty. While there are no

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signs yet of widespread food shortages, the report warns that a protracted COVID-19 crisis

may threaten food security, especially for the most vulnerable.

In the short term, the report recommends preparing weak healthcare systems for greater

COVID-19 impacts, as well as providing safety nets and securing access to food, medical

supplies, and necessities for the most vulnerable. To minimize short-term economic pain,

the report calls for establishing temporary work programs for unemployed migrant

workers, enacting debt relief measures for businesses and individuals, and easing inter-

regional customs clearance to speed up import and export of essential goods.

Once lockdown restrictions are loosened, South Asian governments should adopt

expansionary fiscal policies combined with monetary stimulus to keep credit flowing in

their economies. Since many South Asian countries have limited fiscal space, these policies

should target people worst hit by the freeze on economic activity. The report urges

governments to adopt temporary spending measures and coordinate with international

financial partners to avoid unsustainable long-term debt levels and fiscal deficits.

“After tackling the immediate COVID-19 threat, South Asian countries must keep their

sovereign debt sustainable through fiscal prudence and debt relief initiatives,” said Hans

Timmer, World Bank Chief Economist for the South Asia Region. “And looking beyond

the present crisis, lie great opportunities to expand digital technologies for payment

systems and distant learning to unlock remote areas in South Asia.”

Due to the COVID-19 pandemic, economic circumstances within countries and regions are

fluid and change on a day-by-day basis. The analysis in the report is based on the latest

country-level data available as of April 7, 2020.

The World Bank Group is taking broad, fast action to help developing countries strengthen

their pandemic response, increase disease surveillance, improve public health interventions,

and help the private sector continue to operate and sustain jobs. It is deploying up to $160

billion in financial support over the next 15 months to help countries protect the poor and

vulnerable, support businesses, and bolster economic recovery.

The details of each of the research paper are discussed in the individual report.

18 | P a g e

Project Title: “Healing the Economic Injuries Caused by Deadly Covid-19 Pandemic”

Sector: Agriculture

Contributor: Mr. Md. Mamunur Rashid FCMA

1. Introduction

The Coronavirus disease (COVID-19) is an infectious disease caused by sever acute respiratory

syndrome Coronavirus 2 (Driggin et al., 2020) and has drastically disrupted the global economy

(McKibbin and Fernando, 2020). No previous infectious disease outbreak has impacted the

global economy powerfully as the COVID-19 pandemic (Baker et al., 2020). Developing and

less-developed countries are likely to suffer intensely due to high density of population and less

developed health care systems. Since vaccines and specific medications are not yet available for

COVID-19, other public health and social measures can play a critical role in reducing the

number of infections (WHO, 2020). The social measures such as maintaining social and physical

distance can play crucial role to slow the spread of disease by stopping chain of transmission of

COVID-19 and preventing new one from appearing (WHO, 2020). This stimulates governments

in majority of the countries across the world to instigate local, regional and national lockdown.

This lockdown further results in economic shocks in the forms of shutdowns, layoffs and firm

exits (Guerrieri et al., 2020).

Akin to other economies across the globe, the economy of Bangladesh has also been severely

affected by this pandemic. Despite the incredible resilience of its people in fending off natural

and manmade disasters in the past 49 years, the completely different nature and magnitude of the

COVID-19 pandemic requires a combined effort of Bangladesh’s leaders in the public and

private sectors in trimming down the long-term adverse effect on its economy (World Economic

Forum, 2020). Moreover, since the evolution of this disease and its economic impact is highly

uncertain, it is really difficult for policymakers to formulate an appropriate macroeconomic

policy response (McKibbin and Fernando, 2020).

Agriculture, industry and services are the three major sectors of the Bangladesh economy, while

each having different sub-sectors. Of these, the economy is losing Tk 33 billion every day from

its service, industry and agriculture sectors during the nationwide shutdown over the Coronavirus

outbreak (The Financial Express, 2020a). The gross loss per day in the agriculture sector from

March 26 to April 25 was about Tk 2 billion (The Financial Express, 2020a). Considering the

implication of agriculture sector in providing necessary foods, it is imperative to learn about the

losses suffered by its various sub-sectors in order to find ways to minimize the long-term adverse

effect on this sector. Consultative Group on International Agricultural Research (CGIAR) also

suggested undertaking this type of research to assist policymakers in formulating appropriate

policies to mitigate the impacts of this deadly pandemic.

The purpose of this study is to explore what losses and to what extent losses are caused by the

‘Deadly Covid-19 Pandemic’ in the agriculture sector in Bangladesh, and what are the possible

remedies to heal the economic injuries caused by this pandemic. To this end, the study collected

primary data from several contributors (farmers and agriculture businesses) of this sector to

19 | P a g e

identify the nature and extent of losses suffered and ways to heal such economic losses caused by

this pandemic. Relevant data from secondary sources are also collected and analyzed to provide

an overall picture of the losses suffered and measures to cure such losses.

2. Sector overview

Bangladesh is predominantly an agricultural country and has been given the utmost priority in

order to make it self-sufficient in food (Bangladesh Economic Review, 2018). According to

Quarterly Labor Force Survey 2016-2017, about 40.62 percent of the labor force in Bangladesh

are being employed by the broad agricultural sector. The significance of this sector is further

evident by its substantial contribution (around one-sixth to one-eighth or 16% to 13%) in the

country’s GDP over the years. Accordingly, to achieve the target of self-sufficiency in food, the

government needs to pay considerable attention to the development of this sector. Unfortunately,

the growth rates of the agriculture sector and its contribution to Bangladesh’s economy have

dropped due to the lack of government support and initiative for modernizing the sector (New

Age, 2019). The growth rate of the agricultural production was 3.47 percent in the financial year

2018 and has dropped to 2.58 per cent in the fiscal year 2018-2019 (New Age, 2019). Identical to

this picture, Table 1below exhibits a declining trend of this sector’s contribution in the national

economy (GDP) over the years. As can be seen in the Table 1 below, the relative contribution of

agriculture sector in GDP was about 16.81% (or about one-sixth) in the fiscal year 2010-2011

and has declined to 12.68% (or about one-eighth) in the year 2018-2019, thereby demonstrates a

continuous decline (though slowly) with the passage of time.

Table-1: Contribution of Agriculture sector in the GDP

Year/Sector GDP at current market price

(In CroreTk)

Agriculture

(In CroreTk)

Agriculture

(% of GDP)

2010-2011 915829 153951 16.81%

2011-2012 1055204 170706 16.18%

2012-2013 1198923 185753 15.49%

2013-2014 1343674 206276 15.35%

2014-2015 1515802 224081 14.78%

2015-2016 1732864 243391 14.05%

2016-2017 1975815 265025 13.41%

2017-2018 2250479 294234 13.07%

2018-2019 2542482 322393 12.68%

Source:Author’s calculation based on Bangladesh Economic Review 2018.

Several critical facts can be identified with respect to the contribution of agriculture sector in

GDP from Figure 1 and Figure 2 presented below.

20 | P a g e

Source: Author’s calculation based on Bangladesh Economic Review 2018.

Despite the continuous lift up of the absolute amount of agricultural contribution in the GDP (as

can be seen in Figure 1 above; from Tk 153951 Crore in the year 2010-2011 to Tk 322393 Crore

in the year 2018-2019, more than twice), the relative contribution of this sector has been

declining over the years (as can be seen in Figure 2 below; from 16.81% in 2010-2011 to 12.68%

in 2018-2019).

ASM Golam Hafeez, one of the prominent professors of agricultural finance at Bangladesh

Agricultural University, warned that “negligence to the sector would affect employment of the

country’s 45 per cent population as well as government’s development goals including achieving

8.2 per cent GDP growth and sustainable development goals” (New Age, 2019). He identified

several grounds for such decline including inadequate mechanization, defective allocation

system of government subsidy and lack of adequate government support (New Age, 2019).He

further holds that the allocation proposed for agriculture in the national budget 2019-2020 was

less in percentage terms as compared to the allocation for the outgoing year (New Age, 2019).

These resulted in the outflow of substantial foreign currencies in financing the import of food

grains. For example, in the financial year 2017-2018, the food grains import through government

was 97.7 lakh metric ton (MT) (rice 38.9 lakh MT and wheat 58.8 lakh MT), while another 83.8

lakh MT (rice 30.1 lakh MT and wheat 53.7 lakh MT) was imported by the private sector, and

consequently spent substantial foreign currency to finance them (Bangladesh Economic Review,

2018).

9158291055204

11989231343674

1515802

1732864

1975815

2250479

2542482

153951 170706 185753 206276 224081 243391 265025 294234 322393

2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019

Figure 1: Contribution of Agriculture sector in GDP (In absolute figure)

GDP at current market price (In Crore Tk) Agriculture (In Crore Tk)

21 | P a g e


This was further supported by the decline in the food grains production from 388.17 lakh MT for

the year 2015-2016 to 386.96 lakh MT in the year 2016-2017 (Bangladesh Economic Review,

2018). However, Mr. Hafeez further holds that adequate incentives and policy support from the

government could help boosting production by many folds, which in turn, could even support

enhancing the country’s export earnings while stopping the outflow of scarce foreign currency

incurred previously in financing import food grains (New Age, 2019). He cited an example how

it can happen by stating “tonnes of Pineapple were being wasted every year in absence of proper

cold storage facility, adding that the country could have earned significant amount of foreign

currency if food processing facility were available” (New Age, 2019).

Table 2 presents the contribution of different sub-sectors of Agriculture in absolute amount.

There are three sub-sectors of agriculture sector namely farming, livestock and fisheries.

However, Bangladesh Economic Review presented data on the respective contribution of four

sub-sectors of agriculture including (1) crops and horticulture, (2) animal farming, (3) forest and

related service and (4) fishing. As can be seen in the Table 2, the highest contribution was made

by crops and horticulture, followed by fishing and animal farming. Interestingly, all of these four

sub-sectors experienced a slow raise over the years. Figure 3 exhibits these results in a bar

diagram which clearly displays this uplift in all these sub-sectors along with the dominance of

crops and horticulture.

100% 100% 100% 100% 100% 100% 100% 100% 100%

16.81% 16.18% 15.49% 15.35% 14.78% 14.05% 13.41% 13.07% 12.68%

2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019

Figure 2: Relative contribution of Agriculture sector in GDP (In percentage)

GDP at current market price (In %) Agriculture (% of GDP)

22 | P a g e

Table-2: Contribution of different sub-sectors of Agriculture

Year/Sector Agriculture

(In CroreTk)

Crops and

horticulture

(In CroreTk)

Animal

farming

(In CroreTk)

Forest and

related

service

(In CroreTk)

Fishing

(In CroreTk)

2010-2011 153951 91903 20171 13395 28482

2011-2012 170706 100899 22999 14981 31827

2012-2013 185753 106794 25359 16605 36995

2013-2014 206276 117903 27667 18398 42308

2014-2015 224081 126121 29885 20494 47581

2015-2016 243391 134322 33165 22827 53076

2016-2017 265025 143704 36026 25668 59627

2017-2018 294234 159171 39625 28557 66882

2018-2019 322393 172330 43215 32574 74275 Source: Author’s calculation based on Bangladesh Economic Review 2018.


Table 3 shows the relative contribution of different sub-sectors of agriculture in percentage form.

The Table reports that about 50-60% (around one-half) of total agricultural contribution is

coming from crops and horticulture. Unfortunately, the proportion of contribution made by this

sub-sector has been declining over time. The relative contribution of crops and horticulture in

agriculture was about 59.70% in the year 2010-2011 and a gradual decline trims down the figure

2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019

91903100899

106794117903

126121134322

143704

159171

172330

20171 22999 25359 27667 29885 33165 36026 39625 43215

13395 14981 16605 18398 20494 22827 25668 28557 3257428482 31827 3699542308

4758153076

5962766882

74275

Figure 3: Contribution of different sub-sectors of Agriculture

Crops and horticulture (In Crore Tk) Animal farming (In Crore Tk)

Forest and related service (In Crore Tk) Fishing (In Crore Tk)

23 | P a g e

to 53.46% in the year 2018-2019. However, two other sub-sectors-fishing and forest- seem to

have experienced a gradual raise in terms of relative contribution in the agriculture sector.

The relative contribution of fishing increases from 18.50% (2010-2011) to 23.04% (2018-2019)

which implies about 25% uplift during the past 9 years.

Table-3:Relative contribution of different sub-sectors of Agriculture

Year/Sector Agriculture

(%)

Crops and

horticulture(%)

Animal

farming(%)

Forest and

related service

(%)

Fishing (%)

2010-2011 100% 59.70% 13.10% 8.70% 18.50%

2011-2012 100% 59.11% 13.47% 8.78% 18.64%

2012-2013 100% 57.49% 13.65% 8.94% 19.92%

2013-2014 100% 57.16% 13.41% 8.92% 20.51%

2014-2015 100% 56.28% 13.34% 9.15% 21.23%

2015-2016 100% 55.19% 13.63% 9.38% 21.80%

2016-2017 100% 54.22% 13.59% 9.69% 22.50%

2017-2018 100% 54.10% 13.47% 9.70% 22.73%

2018-2019 100% 53.46% 13.40% 10.10% 23.04%


Forest and related services also experienced a 16% rise in the past 9 years (from 8.70% in 2010-

2011 to 10.10% in 2018-2019). The contribution of animal farming appears to be moving around

13%. This pattern of relative contribution of different sub-sectors of agriculture and their trend

over the past 9 years is well depicted in the Figure 4 below. As can be seen in this Figure, despite

the highest contribution made by crops and horticulture, there exhibits a gradual decline over

time. The second highest contributor-fishing- demonstrates a gradual rise over time, and the

same is the case for forest and related services.

Fortunately, the government of Bangladesh has taken a number of steps to develop the

agriculture sector including the expansion of small irrigation facilities, reduction of water

logging, production of improved quality and high yielding varieties of seeds and their

preservation and distribution (Bangladesh Economic Review, 2018). Additionally, a considerable

weight is placed on agricultural research to develop and expand draught and saline tolerant

varieties, short-duration crops and varieties of crops adaptable to a particular weather and

environment of a particular region, proper use of fertilizer and integrated pest management

(IPM) for pest control (Bangladesh Economic Review, 2018).

24 | P a g e

The use of nuclear technology and bio-technology is also well evident in the invention of saline

tolerant and short-duration crop varieties technology (Bangladesh Economic Review, 2018).

Steps have also been taken to scale up subsidy on agricultural inputs, irrigation facilities,

ensuring storage facilities of food grains, and availability of irrigation instruments (Bangladesh

Economic Review, 2018).

3. Research methodology

The population of the study includes all the farmers residing and registered agro-based business

operating in Bangladesh. However, due to the country-wide lockdown caused by COVID-19

Pandemic it is impractical to visit different areas of the country to collect data from the farmers.

Moreover, farmers are not familiar with the use of internet and related technology which creates

further difficulties in collecting data using such technologies. Despite this limitation, the study

attempts to create a pool of farmers who are engaged in cultivating all sorts of crops. The final

sample includes a total of 350 farmers cultivating all sorts of crops during the periods of study.

With respect to the agro-based business, the study collects data from 116 businesses through

both face-to-face and online questionnaire surveys. The collected data have been tabulated and

analyzed to demonstrate the effect of the pandemic on the respective sectors. A five-point Likert

scale has been used to capture the perceptions of the farmers and agro-based businessmen to

measure to what extent (ranges from ‘to a great extent’ to ‘not at all) the respondents’ economic

affairs have been affected by this deadly pandemic.

4. Effect of Deadly Covid-19 Pandemic on the Agriculture sector

Like other countries across the globe, Bangladesh has adopted national lockdown strategy, as a

panacea, to slow the spread of disease by stopping chain of transmission of COVID-19 and

preventing new one from appearing. As parts of this strategy, several protecting measures such

0

100% 100% 100% 100% 100% 100% 100% 100% 100%

59.70% 59.11% 57.49% 57.16% 56.28% 55.19% 54.22% 54.10% 53.46%

13.10% 13.47% 13.65% 13.41% 13.34% 13.63% 13.59% 13.47% 13.40%8.70% 8.78% 8.94% 8.92% 9.15% 9.38% 9.69% 9.70% 10.10%18.50% 18.64% 19.92% 20.51% 21.23% 21.80% 22.50% 22.73% 23.04%

Figure 4: Relative contribution of different sub-sectors of Agriculture

Agriculture Crops and horticulture (%) Animal farming (%)

Forest and related service (%) Fishing (%)

25 | P a g e

as border closures, restrictions of movement, closures of restaurants, community quarantines,

and market, supply chain and trade disruptions have become apparent which substantially

affected the agricultural production, food supply and demand (The Financial Express, 2020b).

Consultative Group on International Agricultural Research (CGIAR) suggested that despite

strong efforts to address Covid-19’s impact, the pandemic exposed farmers, traders, and

agricultural businesses to unprecedented challenges (The Business Standard, 2020). The report

also estimates a slowdown in the ongoing horticulture and boro crop harvests and delays in the

maize harvest loom in the near-term caused by the social distancing measures (The Business

Standard, 2020). Farmers, specifically who reside in the small scale category, are highly

vulnerable as they are facing barriers in getting access to markets to sell their products and

buying seeds and other essential inputs (The Financial Express, 2020b).

Selling perishable goods at reasonable prices have become the major challenges for farmers and

agriculture businesses due to the scarcity of general transport such as trucks and other informal

and courier transport services (The Business Standard, 2020). Moreover, the shortage of labor

and spikes in product’s prices has created obstacles for fresh food supply chain (The Financial

Express, 2020b). Since these perishable and fresh foods includes different types of vegetables,

fish, and fruits, which are crucial for nutrition and health, any sort of interruptions in their supply

will further weaken the prevention capability of people living in the affected areas. Additionally,

such disruptions in the supply chain further substantiate significant food loss and waste.

Agriculture businesses dealing with livestock, poultry, and aquaculture are also suffering

considerably as the supply of essential feeds and veterinary services have been disrupted and are

experiencing unprecedented shocks (The Business Standard, 2020). Moreover, the agricultural

traders of big cities cannot move to the local markets to collect agricultural products such as

vegetables, egg, milk, and fruits because of the scarcity of general transport and fear of being

affected by the pandemic (Green Watch, 2020). Accordingly, farmers are not getting the legal

prices for their products and also residents of big cities are not getting these fresh foods at legal

prices (Green Watch, 2020).

Dr. Md. Sekender Ali, Professor and Pro-Vice Chancellor of Sher-e-Bangla Agricultural

University, identified (in a column published in Green Watch Dhaka) a number of adverse

effects of ‘COVID-19 Pandemic’ on the agricultural sectors specifically on crops, livestock and

fisheries including:

• Inadequate supply of agricultural inputs (e.g., seeds, fertilizers, pesticides, vaccine);

• Inadequate pest control measures of the crops;

• Inadequate irrigation facilities due to lack of spare parts of irrigation equipment;

• Chronic shortage of labor for crop harvesting, cooling, sorting, grading, packaging,

handling, loading, transporting, unloading, storing and trading;

• Massive wastage and low price of fresh foods like vegetables and fruits;

• Huge wastage of flowers due to lack of customers, traders, transports and vehicles;

• Huge losses of export quality vegetables producers, crab and shrimp owing to the closure

of borders and airports;

• Food shortage of agricultural laborers for the absence of work opportunity and staying at

home;

26 | P a g e

• Disruption in food processing and distribution because of the shortages of labors and

inputs.

Another research conducted by the Institute of Health Economics of Dhaka University has

focused on the effect of Coronavirus (from March 26 to April 25, 2020) on the economy of

Bangladesh in terms of current losses based on the 2018-2019 GDP. The findings of the research

revealed that the estimated gross loss per day from agriculture, industry and service sector is Tk

33 billion, of which the agriculture sector is suffering an estimated loss of Tk 2 billion a day

(The Financial Express, 2020b). The report also suggested that although agricultural production

was not hampered in the short term, prices of produce will drop as foreign economics have

closed down. The collapse of agriculture marketing and value chain (supply aspect) together with

decline in the earning capability of consumers (demand aspect) seem to severely injure the

agricultural economy of the country.

5. Findings on the perception of contributors about the effect of Covid-19 Pandemic

This section focuses on the perceptions of contributors of agriculture sector specifically the

farmers and agro-based businesses with respect to the effect of the deadly Covid-19 pandemic.

5.1 Perceptions of Agro-based Businesses

Table 4 below presents the perceptions of agro-based businesses including various partners in the

channel of distribution of agricultural products from the farmer to the ultimate consumers. As

can be seen in the Table, 16.40% of the respondents opined that their businesses have suffered

losses ‘to a great extent’; while the equivalent percent of the respondents thought that the extent

of losses incurred by their businesses was ‘slightly above to a moderate extent’. Majority of the

respondents (43.10%) assumed that their losses move around ‘to a moderate extent’ followed by

the extent of losses ‘to a limited extent’ (24.10%). As expected, we did not find any business that

has not been affected by this pandemic.

Agro-based manufacturers are experiencing severe decline in the production volume since

workers are staying at home to avoid the risk of being affected by this deadly pandemic. A

6.00% of the respondents stated that their production has declined ‘to a great extent’, while

18.10% thought it around ‘‘slightly above to a moderate extent’. A 26.70%of the respondents

recognized the extent of production decline ‘to a moderate extent’ as depicted in the Table, while

38.80% of the respondents thought that their production has not been affected by the Pandemic.

With respect to the decline in the sales volume, majority of the respondents (44.80%)

experienced a trim down ‘to a limited extent’. The supremacy of this category is also exhibited in

the case of ‘selling price increases’ which is about 71.60%.

The rising trend of transportation costs and scarcity of transportation appear to be the two most

chronic problems to the agro-based businesses in shifting goods from rural to urban areas.

71.60% of the respondents recognized that transportation cost has risen ‘to a moderate extent’,

while the rest of the respondents 28.40% assumed the rise around ‘slightly above to a moderate

extent’.

27 | P a g e

Table-4: Perception of Agro-based businesses on the loss caused by ‘Deadly Covid-19 Pandemic’

To a great

extent

Slightly above

to a moderate

extent

To a

moderate

extent

To a

limited

extent

Not at

all

Mean/

Average

Q1. My business/company has

suffered loss caused by the

‘Deadly Covid-19 Pandemic’

16.40% 16.40% 43.10% 24.10% 0 3.2500

Q2. To what extent several aspects of your business have been suffered by the ‘Deadly Covid-19 Pandemic’:

The volume of Production

declines/ reduces

6.00% 18.10% 26.70% 10.30% 38.80

%

2.4224

The volume of sales declines/

reduces

6.00% 6.00% 43.10% 44.80% 0 2.7328

Selling price increases (decreases) 0 0 12.10% 71.60% 16.40

%

2.0776

Cost of ingredients goes up/

increases

0 0 28.4% 55.20% 16.40

%

2.1207

Transportation costs goes up/

increases

0 28.40% 71.60 % 0 0 3.2845

Scarcity of transportation goes

up/increases

12.00% 55.20% 32.80% 0 0 3.7931

Shortage of labor goes up/

increases

6.00% 22.40% 16.40% 43.10% 12.10

%

2.6724

Labor cost/rate goes up/ increases 0 0 22.40% 16.40% 61.20

%

1.6121

Perishabilty rate of products goes

up/increases

0 0 12.10% 71.60% 16.40

%

1.9569

Maintenance costs goes up/

increases

0 0 44.80% 55.20% 0 2.4483

[Note: Total respondents N=116]

The scarcity of transportation is even worst in comparison to the rise of its costs. Labor scarcity

seems to be greater than that of the rise in the labor costs. These situations are well portrayed in

the Figure 5 to 9. Figure 5 exhibits the perception of agro-based businesses with respect to the

extent of loss suffered, Figure 6 presents the volume of production declines, Figure 7 displays

the volumes of sales declined, Figure 8 demonstrates the rise in the transportation costs, Figure 9

shows the scarcity of transportation and Figure 10 exhibits the shortage of labor goes up caused

by deadly Covid-19 pandemic.

28 | P a g e

6%18%

27%10%

39%

Figure 6: The volume of production declines

To a great extent

Slightly above to a moderate extent

To a moderate extent

To a limited extent

Not at all

0%

28%

72%

0%0%

Figure 8: Transportation costs goes up

To a great extent



To a limited extent

Not at all

17%

16%

43%

24%

0%

Figure 5: The extent of loss suffered by agro-based businesses.

To a great extent



To a limited extent

Not at all

6% 6%

43%

45%

0%

Figure 7: The extent of sales volume declines

To a great extent



To a limited extent

Not at all

29 | P a g e

Table 5 displays descriptive statistics for the extent of loss suffered by agro-based businesses in

percentage form. As can be seen in the Table 5, the mean value of sales volume reduced by was

20.99% with considerable dispersion (11.13%) and the values traveled between 10% and 40%.

Moreover, the price of agricultural products lifted up, on average, 15.26% with a minimum of

5% to a maximum of 40%. Among other items, agro-based businesses have experienced

substantial rise in the transportation cost (22.62%), scarcity of transportation (37.93%), shortage

of labor (22.32%) and maintenance costs (14.57%).

Table 5: Descriptive statistics of the extent of loss suffered (in % in relation to the amount of revenue or

cost before the appearance of ‘Deadly Covid-19 Pandemic’)

Mean SD Median Minimum Maximum

Sales volume reduced/declines by 20.99 11.13 15 10 40

Selling price increase (declines) by 15.26 10.32 10 5 40

Cost of ingredients goes up/ increases by 8.83 8.08 5 5 30

Transportation costs goes up/ increases by 22.62 9.22 20 10 40

Scarcity of transportation goes up/increases by 37.93 6.40 40 30 50

Shortage of labor goes up/ increases by 22.32 11.04 20 5 50

Labor cost/rate goes up/ increases by 0.82 1.86 00 0 5

Perishable rate of products goes up/increases by 8.02 8.67 5 0 30

Maintenance costs goes up/ increases by 14.57 8.14 10 5 30


6%

22%

17%43%

12%

Figure 10: Shortage of labor goes up

To a great extent



To a limited extent

Not at all

12%

55%

33%

0%0%

Figure 9: Scarcity of Transportation goes up

To a great extent



To a limited extent

Not at all

30 | P a g e

5.2 Perceptions of Farmers

Table 6 presents the perception of farmers on the losses caused by the deadly Covid-19

Pandemic. The majority of farmers have experienced loss ‘to a moderate extent’ as displayed in

the Table (63.40%), followed by loss ‘slightly above to a moderate extent’ (21.70%), and ‘to a

limited extent’ (14.90%). In the short run, volume of production has not been severely affected

owing to the short supply of seeds, fertilizer or price hike.

Table-6: Perception of Farmers on the loss caused by ‘Deadly Covid-19 Pandemic’

To a

great

extent

Slightly above

to a moderate

extent

To a

moderate

extent

To a

limited

extent

Not at

all

Mean/

Average

Q1. My farming has suffered loss

caused by the ‘Deadly Covid-19

Pandemic’

0 21.70% 63.40% 14.90% 0 3.0686

Q2. To what extent several aspects of your farming have been suffered by the ‘Deadly Covid-19 Pandemic’:

The volume of Production declines/ reduces due to:

a) Shortage of seeds, fertilizer, labor

etc.

0 0 14.30% 64.60% 21.10% 1.9314

b) Increase of price of seeds,

fertilizer, labor etc.

0 0 49.10% 50.90% 0 2.4914

The volume of sales declines/ reduces 13.70% 6.80% 28.60% 50.90% 0 2.8343

Selling price declines/ reduces 21.10% 21.70% 57.20% 0 0 3.6400

Cost of ingredients goes up/ increases 0 13.70% 14.30% 72.00% 0 2.4171

Transportation costs goes up/ increases 6.90% 56.60% 36.50% 0 0 3.7029

Scarcity of transportation goes

up/increases

20.60% 36.00% 43.40% 0 0 3.7714

Shortage of labor goes up/ increases 0 0 0 6.90% 93.10% 1.0686

Labor cost/rate goes up/ increases 0 0 0 6.90% 93.10% 1.0686

Perishabilty rate of products goes

up/increases

13.70% 6.90% 22.30% 57.10% 0 2.7714

Maintenance costs goes up/ increases 0 13.70% 6.90% 79.40% 0 2.3429


However, the volume of sales and selling prices of produces have been severely affected by the

pandemic as can be seen in the above Table. 21.10% of the respondents recognized that the

selling price of their produces has declined ‘to a great extent’ and 21.70% perceived ‘slightly

above to a moderate extent’. The majority of the respondents (57.20%) claimed the decline in the

selling price ‘to a moderate extent’. The volume of sales has also declined substantially,

specifically the sales of perishable goods like fresh vegetables, pepper, and cucumber. 13.70% of

the respondents recognized a decline in the sales volume ‘to a great extent’, and 28.60% ‘to a

moderate extent; while the majority (50.90%) of the respondents perceived it ‘to a limited

extent’.

Among other items, the farmers have experienced substantial rise in the transportation costs,

scarcity of transportation, and perishabilty rate. This picture is clearly demonstrated in Figure 11

to Figure 14 which displays the extent of loss of suffered, volume of sales decline, the extent of

selling prices declined and the perishabilty rate increased.

31 | P a g e

Table 7 shows the descriptive statistics of the extent of loss suffered by the farmers. The mean

value of decline in the sales volume was 20.88% with a minimum of 10% to a maximum of 50%.

However, the decline in the selling prices of agricultural produces was more disappointing,

14%7%

28%

51%

0%

Figure 12: The volume of sales declines

To a great extent



To a limited extent

Not at all

14% 7%

22%57%

0%

Figure 14: The extent of perishability rate increases

To a great extent



To a limited extent

Not at all

0%

22%

63%

15%

0%

Figure 11: The extent of loss suffered by the farmers

To a great extent



To a limited extent

Not at all

21%

22%57%

0% 0%

Figure 13: The extent of selling price declines

To a great extent



To a limited extent

Not at all

32 | P a g e

33.89% on average (with a minimum of 20% to a maximum of 50%), implying a one-third

decline with substantial standard deviation. An informal discussion with the farmers revealed

that they have experienced massive decline in the prices of fresh vegetables, pepper, and

cucumber. With respect to the rest of the items, the rise in the transportation costs (28.66%),

scarcity of transportation (44.85%), perishabilty rate of produces (21.71%), and maintenance

costs (20.34%) appeared to be more painful to the farmers.

Table-7: Descriptive statistics of the extent of loss suffered (in relation to the amount of revenue or

cost before the appearance of ‘Deadly Covid-19 Pandemic’)

Mean Standard

deviation

Median Minimum Maximum

Sales volume reduced/declines by 20.88 14.96 10 10 50

Selling price reduced/ declines by 33.89 11.73 30 20 50

Cost of ingredients goes up/ increases by 11.88 4.49 10 5 20

Transportation costs goes up/ increases by 28.66 5.51 30 20 40

Scarcity of transportation goes up/increases by 44.85 6.32 50 30 50

Shortage of labor goes up/ increases by 1.77 2.40 00 0 5

Labor cost/rate goes up/ increases by 1.08 2.06 00 0 5

Perishable rate of products goes up/increases by 21.71 11.17 20 5 40

Maintenance costs goes up/ increases by 20.34 5.09 20 10 30


6. Recommendations

6.1 Contributors’ recommendations

To learn about the perception of the key contributors (farmers and agriculture businesses) in this

sector regarding the ways to heal the economic injuries caused by the deadly Covid-19

pandemic, we ask them to suggest what the Government of Bangladesh can do in this respect.

We found a substantial variation in the suggestions offered by the respondents. We group them

into two major categories: (1) farmers’ recommendation and (2) agriculture businesses’

recommendation.

6.1.1 Farmers’ recommendations

6.1.1.1 Ensuring legal prices of agriculture produces

The most challenging task for the monitors of the agricultural market systems is to ensure legal

or reasonable prices of agricultural produces. For instance, one of the farmers alleged that “we

are facing relentless problem in selling our produces at reasonable prices. Even in several cases,

we are to sell perishable goods at half of the prices as compared to the prices we received before

the pandemic.”

33 | P a g e

However, this is not true for all types of produces. Another farmer held that “the prices of non-

perishable goods such as maize and wheat have not declined substantially as compared the

perishable goods such as banana, cucumber and pepper.”

Accordingly, the most challenging task for the government is to ensure legal prices of

agricultural produces.

6.1.1.2 Uninterrupted transportation facilities:

Farmers are also experiencing trouble in shifting their produces from their fields to the market

places because of the restrictions on movement as a part of the nation-wide lockdown.

Additionally, the cost of transportation has risen by a significant extent. One of the farmer held

that “we are experiencing chronic problems in managing pickups or delivery vans in shifting our

goods to the market places. Moreover, we are to pay high transportation costs because of the

non-availability of transports. The low prices of produces and high transportation costs have

fostered our survival questionable.”

6.1.1.3 Availability of agricultural inputs at reasonable prices:

The prices of several inputs have lifted up which further promoted the difficulties to continue the

agricultural production at normal pace. One of the farmer suggested that “the prices of several

inputs such as seeds, fertilizer and pesticides have gone up to some extent which enhances our

misery to continue cultivation at normal level. We expect the respective wing of the government

will monitor the agricultural input prices to enable us to keep the pace of our cultivation.”

6.1.1.4 Financial assistance to continue production:

The low price of agricultural products, increased transportation and input costs and high

perishabilty rate have trimmed down the purchasing power of majority of the farmers.

Accordingly, they require medium to long-term financial assistance to continue their survival

and finance their cultivation. As majority of the farmers are unaware of financial institutional

facilities, the government has to find ways to reach them with required financial assistance.

6.1.1.5 Migration of labor from surplus to deficit areas:

There are some particular areas in Bangladesh that are recognized as the producer and supplier of

paddy and rice. During harvesting season, such areas require additional labor from other areas to

collect their produces from field to home. Accordingly, safe arrival and departure of these

laborers from the surplus areas to the deficit areas are badly needed to facilitate uninterrupted

harvesting.

6.1.2 Agro-based businesses’ recommendations

6.1.2.1 Financial assistance to continue payment of fixed costs

The deadly Covid-19 pandemic forced many agricultural businesses to discontinue their

production activities or to trim down the level of operation. However, several fixed costs

associated with such businesses like salaries, rent, and other maintenance costs are unavoidable

34 | P a g e

which require substantial cash outlay. For instance, one of the seeds manufacturers stated that

“our production activities have been entirely stopped due to the emergence of Covid-19

pandemic. But we need to pay several fixed costs such as salaries, rent and utilities constantly.

Therefore, we badly need long-term financial assistance to survive in the foreseeable future.”

6.1.2.2 Ensuring safe work environment to continue operation

Workers are staying at home due to the announcement of nation-wide lockdown. Furthermore,

the fear of being affected by co-workers also induced them not to continue their works in a

crowding environment. Accordingly, government needs to take imitative to provide required

assistance to ensure that people working together are not affected by the pandemic.

6.1.2.3 Uninterrupted transportation facility

Agro-based businesses operating in the rural areas are experiencing shortage of transport

facilities to transfer agricultural produces from rural areas to big cities. For instance, one of the

businessmen in rural areas held that, “despite government permission to transport agricultural

produces, we are facing difficulties in hiring truck, pickups and other delivery vans to transport

locally purchased goods to big cities. Moreover, the high transport costs trimmed down our

profits substantially”.

6.1.2.4 Enhancing farmers’ ability to pay inputs price

As mentioned in the preceding section, the farmers’ purchasing power has gone down due to the

low prices of produces and excessive input and transport costs. This further trimmed down the

sales of agro-based businesses as their buyers have lost their purchasing power. One of the

owners of agro-based business suggested that “farmers are our ultimate buyers. So, if they lose

their buying capability substantially due to low prices of their produces, then who will buy our

products. We request the government to provide marginal farmers the required financial

assistance so that they can continue their purchase and cultivation.”

6.1.2.5 Monitoring of market systems to control dishonest hoarders

Farmers are not getting legal prices whereas consumers are buying at excessive price due to the

presence dishonest hoarders in the supply chain. Accordingly, strict monitoring of market

systems specifically controlling dishonest hoarders might provide fair business environment.

One of the retailer of agricultural inputs opined that “the middleman specifically dishonest

hoarders play the key role in raising the products’ price in the market. Consequently, farmers

are being deprived from legal prices and consumers are paying undue high prices. We are

requesting the government attention in controlling these dishonest hoarders.”

6.2 ICMAB’s recommendations

The task of suggesting appropriate strategies in healing the economic injuries caused by

‘COVID-19 Pandemic’ has been complicated by its highly uncertain nature of evolution and

spread up process in addition to its transition between several forms. Accordingly, policymakers

are facing substantial difficulties in formulating an appropriate macroeconomic policy in

combating the adverse effect of this deadly pandemic. The task is further complicated by the

35 | P a g e

misery of less developed health care system and higher population density which are very

common in less-developed and developing economies like Bangladesh. At the one extreme the

nationwide lockdown trims down the spread rate of the pandemic, while at the other extreme

such strategy lifts up the misery of significant portion of the population due to the massive

interruption in the normal trade and economic activities. Consequently, the notion of “one size

does not fit for all” becomes vigilant in majority of the sectors. In other words, strategies suitable

in one context may now work properly in other contexts because of the presence of a separate set

of socio-economic characteristics. Accordingly, the recommendations are bound to be context

and content specific. Taking the unique nature of agriculture sector into account, we suggest the

following steps to be taken by the policy makers in healing the economic injuries caused by the

ongoing ‘COVID-19 Pandemic’, specifically to avert further risks to Bangladesh’sfood systems:

1. Avoiding trade restrictions for the agents associated with agricultural food supply chainat

the best possible level;

2. Allow transportation of agricultural products from rural to urban areas to ensure the

mutual benefits of farmers and consumers;

3. Ensure uninterrupted flow of essential inputs to farmers through the regular market

systems at reasonable prices;

4. A strong monitoring cell should actively oversee the market systems to assure legal

prices of agricultural produces for farmers as well as reasonable prices of essential inputs

such as seeds, fertilizers, pesticides and vaccinations;

5. Agricultural laborers and poor farmers experiencing extreme food shortage should be

supplied with essential foods to ensure their survival;

6. Allot substantial incentives for the financial institutions that support agricultural activities

so that they can support financially farmers and others involved in the channel to survive;

7. Tax waiver and subsidy on the imports of essential foods, agricultural machineries and

inputs may further motivate the key players in this sector to continue their role in meeting

foods demands of the country;

8. Farmers and exporters of agricultural products specifically vegetables, crab and shrimps

cultivators and exporters need enhanced financial supports to survive since the closure of

borders and port significantly and adversely affected their sales volume and prices;

9. Forming specialized monitoring cell by the ministry of agriculture at the root level to

reach marginal and poor farmers with necessary financial and input supports specifically

who are unaware of banking activities and have no access to such facilities;

10. Allocating short-term as well as long-term loan with zero to five percent interest rate to

those agricultural entrepreneurs who are engaged in manufacturing agricultural inputs

such as seeds, poultry feeds, and other inputs, and experienced postpone of production

activities or substantial reduction in the production and sales volume due to COVID-19

Pandemic. The amount of funds allocated to these firms should enable them to continue

salary payment to their workers as well as to incur other maintenance costs such as rent,

utility bills and other fixed costs;

36 | P a g e

11. Migration of agricultural workers from surplus zone to deficit zone may further boost up

the quality of produce as well as reduce the rate of food lost and waste. However, due

care needs to be taken regarding the maintenance of social distancing to avoid the spread

up of the pandemic;

12. Lobbying/tactful discussion with international development partners such as FAO (Food

and Agriculture Organization), UNDP (United Nation Development Program), IMF

(International Monetary Fund), and the World Bank to find ways along with assistance to

combat the emerged adverse effect on agriculture sector;

7. Conclusion

The aim of the present research was to assess the type and extent of losses caused by the ‘Deadly

COVID-19 Pandemic’ in the agriculture sector of Bangladesh; and suggesting possible remedies

to heal the economic injuries suffered by the sector. To this end, the study collected data from

both primary and secondary sources to assess the relative contribution of this sector in the

economy as well as the perception of key contributors with respect to the nature and extent of

losses suffered and possible remedies to overcome them in the near future. Findings revealed

several critical facts with respect to the trend of contribution of this sector over time, the

economic effect of this pandemic and plausible ways to go forward.

With respect to the absolute and relative contribution of agriculture sector in the GDP, the results

revealed a declining trend in the relative contribution of this sector in the overall GDP of the

country. However, the amount of contribution in absolute terms is rising over time as depicted in

Table 1, Table 2 and Figure 1. Amongst the sub-sectors of agriculture sector, the highest

contribution (around 50%) has been coming from crops and horticulture followed by fishing and

animal farming (see Table 3 and Table 4 and Figure 2 and 3).

The effect of ‘COVID-19 Pandemic’ on agriculture sector appears to be context and content

specific. For farmers, the challenge of selling perishable goods at legal prices seems to be the

most challenging one. Despite the nonstop permission to transport agricultural products, the fear

of being affected by the Coronavirus and high transpiration costs foster the creation of barriers in

getting fresh vegetables, milk, eggs, livestock and other nutritious foods for the residents living

in the big cities. The nationwide shutdown of government and private organizations further

added to the misery of people who fully depend on their monthly salary income to finance their

daily necessities. Majority of the agricultural manufacturing businesses discontinued their

production due to the scarcity of inputs and labor. The amount of bad debts of these businesses

also rises up as farmers are unable to sell their produces at reasonable prices. Accordingly,

people working in this sector are experiencing threats to lose their jobs in the near future. The

misery of exporters of fresh foods, vegetables, crabs and shrimps has no bound owing to the

closure of borders and airports. They need immediate financial supports to survive in the

foreseeable future.

To heal the economic injuries caused by this deadly covid-19 pandemic, the key contributors of

this sector suggested several measures. From the farmers view point, assuring the legal prices of

perishable goods would be the most appreciable one. To make it happens; strong monitoring of

the emerged market systems is badly required in addition to the uninterrupted transportation of

37 | P a g e

these goods from rural to urban areas. To continue the uninterrupted production of agricultural

products in the upcoming seasons, nonstop supply of agricultural inputs (such as seeds,

fertilizers, pesticides and other ingredients) at reasonable prices must be assured. Marginal

farmers and daily laborer who are experiencing severe food crisis are to be supplied with

necessary foods to keep them alive. For the agricultural businesses, short-term to long-term

financial supports needs to be extended to enable them to meet their fixed costs such as wages

and salaries of workers and employees, rent of premises, and other utilities and maintenance

costs.

Fortunately, the Prime Minister (PM) of Bangladesh, Sheikh Hasina, has announced a stimulus

package of BDT 5,000 Crore for the farmers to boost up the agricultural production in the

backdrop of the Covid-19 fallout (Green watch, 2020). The PM further holds that as Bangladesh

is an agrarian country, she has taken special measures for agricultural sector since the current

situation demanded enhanced agricultural produces (Green watch,2020). She promised

additional BDT 9,000 Crore for fertilizer subsidy in the upcoming budget to trim down the

impact of this deadly pandemic (Green watch, 2020). The four percent interest bearing loans for

producing spices like onions, garlic, and gingers will also be continued to minimize the impact of

this pandemic. Her government also allocated BDT 100 Crore to the Ministry of Agriculture to

mechanize the harvesting of crops and another BDT 150 Crore for distributing seeds among the

affected farmers to enable them to continue agricultural production (Green watch, 2020).

Further research may focus on assessing the nature and extent of regional loss in this sector. Sub-

sectors wise and produce-specific research may also provide useful insight to the policymakers

in allocating the funds and to well address the emerged injuries in this sector. Several pilot

studies may be conducted to find out appropriate methods of allocating the sanctioned funds and

monitoring the allocations process.

The findings of the present research must be interpreted in the lights of several limitations. First,

due to the scarcity of time and funds the study focused only on a limited number of farmers and

firms doing businesses in this sector. Second, the results of different region may differ

significantly owing to the existence of different set of socio-economic characteristics. Finally,

the portfolio of agricultural produces contains a long list of goods with distinct characteristics;

and therefore a generalized finding and recommendation is hardly possible.

Despite these limitations, we believe that the present research will enrich the understanding of

policymakers in formulating an appropriate macroeconomic policy to combat the emerged

adverse effect on the agriculture sector caused by the deadly Covid-19 pandemic.

38 | P a g e

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Sector: Ready-Made Garments (RMG)

Contributor: Mr. R. Tareque Moudud FCMA

A. Introduction

Since the beginning of 2020, the world has been in the grip of COVID-19, a pandemic which is

taking its toll on people’s lives. With six months into the year, the number of people infected

worldwide has already crossed six million, and deaths over 400,000.

As fallout from this widespread disease, a parallel pandemic is engulfing the way we work, our

livelihood and thus the macroeconomic indicators. The organizational activities of

management, production, marketing etc. are all in its sway, and while the international research

community is doing its utmost to find a medicinal cure, the economic malaise which has set in

will possibly take a toll which could last longer than the disease itself. For, today’s investments

will add to tomorrow’s national wealth and if this process is impeded then the fallout will affect

not only our national growth but also the nation’s health in the future.

B. Bangladesh economy—pre-COVID-19 scenario:

The country had been witnessing strong economic growth during the past decade, and it has been

building on its strength as a leading exporter of RMG products. Latest figures1 (F/Y 2018-19)

showed strong growth in the country’s economy, led by rising export earnings and foreign

remittances. During the f/y 2019, exports grew by 10.55 % over the previous year, amounting to

USD 40.53 billion. Also capital inflow into the country in the form of Foreign Direct Investment

(FDI) increased by over 40%, with most of the investments in the power, food, and textile

sectors. This is ample proof of the confidence that foreigners had about the country. The

country’s unemployment remained steady at about 4.4%2.

Agriculture has traditionally been the backbone of the country’s economy, and though there has

been a gradual shift from this to other sectors it still employees approx. 40% of the country’s

workforce3 and contributes 16.5%4 of the country's Gross Domestic Product (GDP).

The country’s economy is dominated by three sectors5 viz. the Services (56%), Agriculture

(15.5%) and the Industrial (28.1%).

1https://www.thedailystar.net/business/export/double-digit-export-growth-of-bangladesh-in-fy-2019-1768774 2https://www.google.com/search?q=bangladesh+unemployment+rate&rlz=1C1GGRV_enBD855BD855&oq=bangl

adesh+unemployment&aqs=chrome.0.0j69i57j0l6.5640j0j8&sourceid=chrome&ie=UTF-8 3https://www.theglobaleconomy.com/Bangladesh/Employment_in_agriculture/ 4https://reliefweb.int/sites/reliefweb.int/files/resources/CSA_Profile_Bangladesh.pdf 5https://www.adb.org/sites/default/files/linked-documents/50197-001-so.pdf

https://www.thedailystar.net/business/export/double-digit-export-growth-of-bangladesh-in-fy-2019-1768774

https://www.google.com/search?q=bangladesh+unemployment+rate&rlz=1C1GGRV_enBD855BD855&oq=bangladesh+unemployment&aqs=chrome.0.0j69i57j0l6.5640j0j8&sourceid=chrome&ie=UTF-8

https://www.google.com/search?q=bangladesh+unemployment+rate&rlz=1C1GGRV_enBD855BD855&oq=bangladesh+unemployment&aqs=chrome.0.0j69i57j0l6.5640j0j8&sourceid=chrome&ie=UTF-8

https://www.theglobaleconomy.com/Bangladesh/Employment_in_agriculture/

https://www.adb.org/sites/default/files/linked-documents/50197-001-so.pdf

40 | P a g e

Bangladesh-the pandemic effect on the economy

Keeping in view the above economic indicators, let us now look at the way COVID-19 could

start to disrupt the gains which the country has accumulated over the years.

Suffering a fate similar to other countries, Bangladesh too is facing the challenges posed by

COVID-19---to the health of its population as well as to its economy.

As on 8thJune 2020, the total number of infected cases was 65,7696and deaths 8887 , and rising.

These are very worrying numbers. The country with its limited resources of health facilities is

more than overburdened and it is worrying to think about the future!

The purpose of this paper is to dwell on the economic impacts of COVID-19 in Bangladesh and

how the Government is planning to address it. Let us now look at some of the relevant published

statistics of what has been happening to the economy over the past few months.

The World Bank (WB)in its press release on 12th April 2020 stated that economic growth in

South Asia will hover between 1.80% to 2.80% during 2020, down from 6.30% , as was

projected 6 months ago.8

According to the report, the predictions are that between 2020 to 2022, Bangladesh’s GDP

growth will be between 1.20% to 3.90%,. Compare this to the estimated growth rate of 8.20% for

2019.

Although the situation is still unfolding and the full impact of the pandemic will be known in the

months to come, certain fallouts are already visible. These are:-

i. Drastic fall in exports of ready-made garments (RMG)9 .: According to "Bangladesh

Garments Manufacturing and Exporters Association" (BGMEA) foreign orders to the

tune of USD 3 Billion have already been cancelled

ii. Fall in tax revenue collection: Actual revenue collection during the current fiscal year

(2019-20) will be BDT 395,43 billion10 compared to the amount expected/projected.

The pandemic has had wide reaching effect on the different sectors of the economy.

Let us briefly consider the two major sectors ---agriculture and industrial:

6https://iedcr.gov.bd/ 7 Ibid. 8: https://www.worldbank.org/en/news/press-release/2020/04/12/south-asia-must-act-now-to-lessen-covid-19-health-

impacts

9https://unb.com.bd/category/Business/orders-worth-3-billion-cancelled-so-far-bgmea/48568 10https://www.newagebd.net/article/99293/nbrs-collection-shortfall-soars-to-tk-39542cr-in-july-jan

https://iedcr.gov.bd/

https://www.worldbank.org/en/news/press-release/2020/04/12/south-asia-must-act-now-to-lessen-covid-19-health-impacts


https://unb.com.bd/category/Business/orders-worth-3-billion-cancelled-so-far-bgmea/48568

https://www.newagebd.net/article/99293/nbrs-collection-shortfall-soars-to-tk-39542cr-in-july-jan

41 | P a g e

C. The Agriculture sector

Agriculture is the mainstay of the country’s economy, and makes up about 16.5% of the

country's Gross Domestic Product (GDP). Approximately 87% 11 of rural inhabitants are

dependent on agriculture for at least part of their income. And so any disturbance in the supply

chain in this sector will result in not only the food supply but also employment. Some of the

more likely impacts12 could be

i. Supply chain of agricultural products will be disrupted, leading to the suppliers

eventually cutting down or even stopping production. Should this happen, it might take

years to get it back up to speed. The resultant effect on food supply could be disastrous,

making a large swathe of the population vulnerable.

ii. With the closure of the agricultural input (seeds, fertilizers etc.) markets, production will

be affected and will also lead to wide scale unemployment.

D. The Industrial sector

The pandemic is taking its toll on the country’s industrial sector. The RMG sector, which has

played a pivotal role in the economic growth of Bangladesh, has been particularly hard hit .RMG

exports figures in 2019 exceeded USD 34 Billion and accounted for approximately 85% of the

country’s exports8.

Table 1: Total export vs. RMG export Source: http://textilefocus.com/rmg-industry-outlook-2019/

11https://reliefweb.int/sites/reliefweb.int/files/resources/CSA_Profile_Bangladesh.pdf

12Covid-19 Bangladesh Multi Sectoral Anticipatory Impact and Needs Analysis dated April 27, 2020 by Needs

Assessment Working Group, Bangladesh

http://textilefocus.com/rmg-industry-outlook-2019/

https://reliefweb.int/sites/reliefweb.int/files/resources/CSA_Profile_Bangladesh.pdf

42 | P a g e

The sector has already suffered a loss of orders of USD 3 Billion (as mentioned above) and

might now be looking at a figure of USD 6 billion5 in the months to come. Bangladesh probably

faced the COVID-19 challenge well before the other countries. This is due to the fact that the

industry is heavily dependent on China for raw materials, and with the pandemic hitting China,

supplies from that country were badly hit. In although to a large extent the supply problem has

now been resolved; the cancellation of orders from European and American buyers has

aggravated the situation. Needless to say, the foregoing will seriously impact upon the country’s

employment figures.

The RMG sector currently employs over 4 million workers, who have already suffered the

uncertainty of payment of their wages; the prospect of loss of employment because of loss of

orders from foreign buyers is now staring them in the face.

E. The way forward

In order to redress the downturn in various sectors of the economy, as mentioned above, the

government has announced a number of economic/financial packages aimed at revitalizing it.

These measures are expected to have the following focus:

i. Employment creation to mitigate the effect of cancelled orders and other downturns in

the economy.

ii. Providing financial support to ensure retention of employees

iii. Aiding companies in their working capital requirements

iv. Provision of essential commodities for the poor

In order to address this burgeoning challenge, the government has rolled out numerous assistance

packages aimed at addressing the present crisis, almost from the start of the lockdown on March

25 2020. The total stimulus package announced by the Government to-date is almost BDT 780

billion (USD 8.60 billion) . The relief packages have been earmarked under different sectors and

particular beneficiary headings, detailing the amount. The classification of the packages

announced is:

1. Stimuli for the manufacturing and agricultural sectors

2. Financial Sector incentives

3. Foreign trade initiatives

4. Tax initiatives

5. BSEC Responses

6. Essential services

7. Foreign services

8. Subsidies for relief efforts

This paper will focus on those incentives, which will have a direct impact on the economy i.e.

points 1 and 2 above

43 | P a g e

1. Some of the major stimuli for the manufacturing and agricultural sectors

The Government has announced certain stimulus packages amounting to BDT 777 billion

(approx. USD 8.60 billion)13aimed at softening the blow, arising out of the crisis. The stimulus

will be given by the banks (both Bangladesh Bank and the commercial banks) and the

Government will provide interest subsidy. This will be given under the headings mentioned

below:-

Manufacturing sector

a) Payment of salaries to workers

In order resuscitate the export oriented industries, the Government has announced a wages

bailout fund of Tk. 50 bn. This is an important first step to aid this sector, which employs

approx. 4.3 million workers. This amount will be used to subsidize the payment of

workers’ wages. It will be lent by Bangladesh Bank at a onetime service charge of 2%.

Loans from this fund will be for 2 years, with a grace period of 6 months. It is hoped that

this assistance will prevent the industry from retrenching its workers. This support , if

properly utilized by the recipients will have a far reaching positive impact on them, in

particular, protecting employment and thus preventing any wide scale protests etc.

b) Working capital loans:

The Government will provide BDT 300 billion as working capital loan to industries

affected by the pandemic, both in the manufacturing and the services sectors. This facility

will be made available through commercial banks. Loans will carry an interest of 9%--half

to be borne by the borrower and the other half to be met from the Govt.’s subsidy. This

facility will be valid for 3 years. However for an individual borrower, the maximum period

of Govt. subsidy will be for one year.

c) Working Capital Loans for Cottage, Micro, Small and Medium Enterprises (CMSME):

This group employs about 87% 14 of the country’s work force and accounts for

approximately 25% of the country’s GDP. In order soften the impact on the sector, the

Government introduced a police to assist with its working capital requirements.

BDT 200 bn. has been earmarked for this purpose. However, the amount will not be given

as direct Govt. funding. Working capital loans will be given through commercial banks,

subject to their internal credit assessment. Borrowers will pay @4% and the Govt.’s

earmarked amount of BDT 200 bn. will subsidize the balance 5% (Total bank interest is

9%).This package will be valid for 3 years. However for individual borrowers, the

maximum period of Govt. subsidy on the interest will be for 1 year

13https://home.kpmg/xx/en/home/insights/2020/04/bangladesh-government-and-institution-measures-in-response-to-covid.html 14https://www.daily-sun.com/printversion/details/415431/2019/08/16/Role-of-micro-small-and-medium-enterprises-in-economic-dev

https://home.kpmg/xx/en/home/insights/2020/04/bangladesh-government-and-institution-measures-in-response-to-covid.html

https://home.kpmg/xx/en/home/insights/2020/04/bangladesh-government-and-institution-measures-in-response-to-covid.html

https://www.daily-sun.com/printversion/details/415431/2019/08/16/Role-of-micro-small-and-medium-enterprises-in-economic-dev

https://www.daily-sun.com/printversion/details/415431/2019/08/16/Role-of-micro-small-and-medium-enterprises-in-economic-dev

44 | P a g e

d) Increasing the Export Development Fund(EDF)

Export Development Fund or EDF, maintained with BB is a facility available to export

oriented industries of the country. It is intended to facilitate their foreign currency

financing of their purchases / imports procurements. The size of this fund is presently USD

1.50 bn. As part of the COVID-19 package, it has now been increased to USD 5 bn.

Interest rate on EDF, which will be charged to the commercial banks by BB has been

revised to 1% per annum from the existing USD LIBOR +0.50%. Commercial banks

would charge to the borrowers @ 2% per annum from the existing rate of 6 – month USD

LIBOR +1.50%.

e) Pre shipment Credit Refinance Scheme

A new credit facility of BDT 50bn as Pre shipment Credit Refinance Scheme has been

introduced by BB. Interest rate will be 3% from BB to commercial Banks and 6% from

commercial Banks to borrowers. No charges other than those listed under the Schedule of

charges of BB will be applicable. Tenure of scheme = 3 years on a revolving basis.

Agriculture Sector

In addition to assisting the manufacturing sector, the Government has also allocated resources to

provide financial support to the country’s agriculture sector. Given the fact that approximately

87%15 of rural inhabitants are dependent on agriculture for at least part of their income, any

downturn in this sector could have disastrous effects on the economy

Some of the incentives given for this sector are:

a) Working capital loan

The Government announced details of a BDT 50 bn. assistance for working capital

dependent agribusiness such as horticulture, fish farming, animal husbandry, seasonal

flower and fruit farming, fish farming, poultry, dairy. This assistance will come in the form

of loans , from commercial banks at a rate of 4% per annum. BB will pay 1% of the

interest amount to commercial banks. The loan will have to be repaid within 18 months,

subject to a grace period of 6 months

b) Other agricultural packages

i. An agricultural subsidy of BDT 95 bn.

ii. BDT. 8.60 bn. to increase purchase of paddy by 200,000 mt. during this agricultural

season; BDT 2 bn. has already been allocated for purchase of agricultural machineries.

15https://reliefweb.int/sites/reliefweb.int/files/resources/CSA_Profile_Bangladesh.pdf


45 | P a g e

2. Financial Sector incentives

In order to provide businesses with the required financial support, the Govt. has announced

certain measures which will provide financial incentives to the economy. Some of these

measures are discussed below:

i. Classification and moratorium on loan repayments:

The Govt. has announced a moratorium on loan repayments until June 2020, stating that

such borrowers will not be in default. This will assist the liquidity position of the borrowers

at a time when many businesses are suffering from loss of earnings. In addition to this the

loan classification will not be affected by this non repayment and it will remain the same

on June 30 2020, as it was on January 1, 2020. However any improvements in the

classification arising out of repayments made by a borrower will be duly reflected.

The Government has also announced certain measures to improve the banks’ liquidity as

well as improve the money supply in the economy. To ensure this the Govt. has announced

a reduction in not only in the liquidity ratio of the banks, but also in the Repo interest rate.

ii. Purchase of Govt. Securities

In order to increase liquidity, the Govt. will be purchasing Govt. Securities from the

secondary market. Under this scheme, banks which have met their Statutory Liquidity

Ratio (SLR) can sell their excess Govt. Securities at the market price.

Conclusion

Bangladesh is a developing country with limited resources. Natural disasters are common and

frequent, and the economy is often exposed to the threat of economic disasters arising out of

floods, tidal bores and cyclones. Its economy is largely dependent on RMG exports and

remittances from workers abroad. In the current pandemic, RMG exports have been hit badly16

due to fall in demand in the buying countries and it is not likely to improve anytime soon.

Subsidies and assistances can work to save a situation, but these cannot be continued

indefinitely.

Let us now consider some of the options available to not only diversify our exports, but also

create new business opportunities serving both the local and the international markets and in the

process also create new jobs.

e. Software and IT exports

As discussed above, the country over the past decade has developed an economic structure

which has been showing healthy figures—albeit in, mainly the RMG sector. In order to

take the country further, the country needs to build on the successes it has achieved. New

export earners need to be identified and developed so that our foreign exchange earnings

are not limited to conventional, low value addition products. The country is now poised to

move into more “high tech” sectors, such as software and IT exports. To this end the

Government, has over the years, been working on developing the digital sector, with

16https://www.dw.com/en/coronavirus-bangladeshs-garment-industry-risks-collapse/a-52917410

https://www.dw.com/en/coronavirus-bangladeshs-garment-industry-risks-collapse/a-52917410

46 | P a g e

specific focus on the export of computer software and IT exports. And so, with improved

infrastructural support, Bangladesh is gradually becoming a significant software exporter.

Spurred on by the initiatives taken by the Government, software companies have entered

into the global market and have already made their presence felt in over 80 countries17.

Bangladesh is already gaining a reputation for supplying quality software products.

Earnings from the export of software and IT supports have already reached about USD 1

billion18. The government has plans to expand this sector to increase exports to about USD

5 billion by 2021, and creating around 2 million jobs19.

This is an area which needs to be taken forward, so that irrespective of the pandemic, a new

window of opportunity can open to boost our foreign earnings potentials. This will require

retraining job seekers to master new skills. All this will require support from the

Government. The Government already has a policy for the development of the sector.

Work on this must now be accelerated so that in the coming years the IT sector can become

one of the leading earners of foreign exchange

f. Business Process Outsourcing (BPO)

This is a new sector which has seen tremendous growth worldwide, given the strong IT and

internet backbone which most countries enjoy. Many companies now outsource some of

their functions to BPO companies, which provide this service for a fee. Globally this

industry is expected to reach about USD 406 billion by 202720 and it is gaining popularity

in sectors such as banking, financial services, utilities, education, transportation, tourism,

construction, etc.

So how does Bangladesh fits into this? Growth in the country’s BPO sector has shown

dramatic increase over the past decade and whereas in 2009 the industry employed only

300 people, in 2019 this has increased to about 50,000 working in 120

companies21.Volume of BPO business in Bangladesh has been growing by about 20 percent

year-on-year and in 2019 this was about $300 million22.Given the performance of the

Bangladeshi BPO sector, many commercial companies abroad 23 are now looking to

outsource their work to Bangladesh rather than to India, China or Philippines, due to the

rising costs in these places and due to the fact that Bangladesh's BPO sector has been able

to provide the same quality, if not better, as that provided by the competitors in India or

Philippines .

The Government needs to work with the major companies in the sector, so that this can be

groomed up as an important source of employment and earnings for the country.

17https://www.daily-sun.com/arcprint/details/415386/Bangladesh-software-export-increases/2019-08-16 18 Ibid. 19 Ibid. 20https://www.grandviewresearch.com/press-release/global-business-process-outsourcing-bpo-market#:~:text=The%20global%20business%20process%20outsourcing,business%20activities%20is%20cost%20saving. 21http://www.theindependentbd.com/post/198206 22https://www.thedailystar.net/business/news/bpo-showing-great-promise-1690048 23https://www.aslpreservationsolutions.com/post/2017/12/11/top-10-bpo-companies-in-bangladesh

https://www.daily-sun.com/arcprint/details/415386/Bangladesh-software-export-increases/2019-08-16

https://www.grandviewresearch.com/press-release/global-business-process-outsourcing-bpo-market#:~:text=The%20global%20business%20process%20outsourcing,business%20activities%20is%20cost%20saving.



http://www.theindependentbd.com/post/198206

https://www.thedailystar.net/business/news/bpo-showing-great-promise-1690048

https://www.aslpreservationsolutions.com/post/2017/12/11/top-10-bpo-companies-in-bangladesh

47 | P a g e

g. Electronic commerce ---online business

Names such as Daraz.com, Chaldal.com and many other electronic or “e-commerce”

companies have now become common household names. This is the next generation of

businesses that is now dominating the country’s business scenario. Riding on the back of an

efficient internet backbone, this sector made a quantum leap in 2017, increasing its volume

by about 70% compared to the previous year. The country’s (electronic) e-commerce

business currently stands at USD 1.6 billion and is projected to increase to USD 3 billion

by 202324. Its development has been facilitated by the presence of Mobile Financial Service

(MFS) as the mode of payment (bKash, Rocket etc.). Complimenting each other’s business,

online shopping cut down on imports matched by online payments could well be the

dominant norm in the years to come.

Here too, the Government could play an important role by making the operations of these

businesses more cost effective, so that online shopping can really establish itself as a

frontline business creating many jobs in the economy

h. Bangladesh’s electronics industry

Till recently a relatively unknown sector, the manufacturing of household electronic goods

has been witnessing rapid growth over the past few years. Local manufacturers such as

“Walton”, “Transtec” and others have now become household names producing

refrigerators, mobiles, televisions etc.

Apart from being an import substitution, the industry also exports some of the electronic

items. Total export of the sector was USD 59.52 million in 201525, and estimated to be

about USD 430 million during 202026.

Here too, the Government needs to facilitate this to be a future export earner and import

substitute without any compromise in quality. JV arrangements with foreign companies

need to be set up, by inviting Foreign Direct Investment (FDI) including technical expertise

to assist the nascent industry. Tax and other financial incentives may be considered to assist

this industry so that in the years to come it can not only earn foreign exchange but also cut

down on imports thereby being a net gain for the economy while at the same time creating

new jobs

To sum up, Bangladesh like many other countries is right now going through very turbulent

days arising out the pandemic. Nevertheless, plans need to be developed so that the country

can recover from lost earnings. It is also giving the economic planners a chance to have a

relook at some of the economic policies to realign them with future requirements in view of

the changed circumstances, arising from loss in the RMG sector and other foreign

exchange earning activities.

24https://brainstation-23.com/e-commerce-business-scenario-in-bangladesh-2006-to-2018/ 25https://tradingeconomics.com/bangladesh/exports/electrical-electronic-equipment 26https://www.hcidhaka.gov.in/pdf/Report_on_Consumer_Electronics_Industry_in_Bangladesh(1).pdf

https://brainstation-23.com/e-commerce-business-scenario-in-bangladesh-2006-to-2018/

https://tradingeconomics.com/bangladesh/exports/electrical-electronic-equipment

https://www.hcidhaka.gov.in/pdf/Report_on_Consumer_Electronics_Industry_in_Bangladesh(1).pdf

48 | P a g e

References:

1:https://www.worldometers.info/coronavirus/country/bangladesh/

2 :https://www.worldbank.org/en/news/press-release/2020/04/12/south-asia-must-act-now-to-

lessen-covid-19-health-impacts

3: https://www.newagebd.net/article/99293/nbrs-collection-shortfall-soars-to-tk-39542cr-in-july-

jan

4: Covid-19 Bangladesh Multi Sectoral Anticipatory Impact and Needs Analysis dated April 27,

2020 by Needs Assessment Working Group, Bangladesh

5: https://www.orfonline.org/research/bangladesh-covid19-badly-impacts-garments-industry-

65275/

6: https://reliefweb.int/sites/reliefweb.int/files/resources/CSA_Profile_Bangladesh.pdf

7 :https://www.adb.org/sites/default/files/linked-documents/50197-001-so.pdf

8: http://textilefocus.com/rmg-industry-outlook-2019/

9: Bangladesh Bureau of Statistics

11. https://www.bb.org.bd/mediaroom/circulars/smespd/apr132020smespd01.pdf

12.https://www.bb.org.bd/mediaroom/circulars/fepd/apr072020fepd18e.pdf

13. https://www.bb.org.bd/mediaroom/circulars/fepd/apr072020fepd18e.pdf

14. https://www.bb.org.bd/mediaroom/circulars/brpd/apr132020brpd09.pdf

https://www.worldometers.info/coronavirus/country/bangladesh/





https://www.orfonline.org/research/bangladesh-covid19-badly-impacts-garments-industry-65275/

https://www.orfonline.org/research/bangladesh-covid19-badly-impacts-garments-industry-65275/


https://www.adb.org/sites/default/files/linked-documents/50197-001-so.pdf

http://textilefocus.com/rmg-industry-outlook-2019/

https://www.bb.org.bd/mediaroom/circulars/smespd/apr132020smespd01.pdf

https://www.bb.org.bd/mediaroom/circulars/fepd/apr072020fepd18e.pdf

https://www.bb.org.bd/mediaroom/circulars/brpd/apr132020brpd09.pdf

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Sector: All Other Sectors

Contributor: Md. Torequl Islam, FCMA (BD), CIMA Adv Dip MA (UK)

Introduction

The COVID-19 pandemic, also known as the Coronavirus pandemic, is an ongoing

global pandemic of Coronavirus disease 2019 (COVID-19), caused by severe acute respiratory

syndrome Coronavirus 2 (SARS-CoV-2).The outbreak was first identified in December 2019

in Wuhan, China. The World Health Organization declared the outbreak a Public Health

Emergency of International Concern on 30 January 2020 and a pandemic on 11 March. As of 27

August 2020, more than 24.3 million cases of COVID-19 have been reported in more than 188

countries and territories, resulting in more than 836,049 deaths; more than 17.12 million people

have recovered.

The pandemic has caused global social and economic disruption, including the largest global

recession since the Great Depression. Up to 100 million people have fallen into extreme poverty

and global famines are affecting 265 million people. It has led to the postponement or

cancellation of sporting, religious, political, and cultural events, widespread supply shortages

exacerbated by panic buying, and decreased emissions of pollutants and greenhouse gases.

Schools, universities, and colleges have been closed either on a nationwide or local basis in 161

countries, affecting approximately 98.6 percent of the world's student population.

Misinformation about the virus has circulated through social media and mass media. There have

been incidents of xenophobia and discrimination against Chinese people and against those

perceived as being Chinese or as being from areas with high infection rates.

Background of this study

The pandemic also caused social and economic disruption on Bangladesh. Till to 28 August,

2020 Bangladesh is positioning 15 from the highest affected country (USA: 60.48 Million

approx.), with affected - 304,583; death - 4,127.

According to The World Bank the economic growth in South Asia will hover between 1.80%

and 2.80% during 2020, down from 6.30%. Bangladesh’s GDP growth will be 1.20% - 3.90%.

Compare this to the estimated growth rate of 8.20% for 2019.

Scope of this study

This study confined to forecast the “Economic injuries caused by deadly COVID-19 Pandemic”

of Bangladesh in respect of following sectors:

1. Capital Market

2. Trade & Commerce

3. Supply chain

4. Supply Chain System

https://en.wikipedia.org/wiki/Pandemic

https://en.wikipedia.org/wiki/Coronavirus_disease_2019

https://en.wikipedia.org/wiki/Severe_acute_respiratory_syndrome_coronavirus_2

https://en.wikipedia.org/wiki/Severe_acute_respiratory_syndrome_coronavirus_2

https://en.wikipedia.org/wiki/Wuhan

https://en.wikipedia.org/wiki/World_Health_Organization

https://en.wikipedia.org/wiki/Public_Health_Emergency_of_International_Concern

https://en.wikipedia.org/wiki/Public_Health_Emergency_of_International_Concern

https://en.wikipedia.org/wiki/COVID-19_pandemic_cases

https://en.wikipedia.org/wiki/COVID-19_pandemic_by_country_and_territory

https://en.wikipedia.org/wiki/COVID-19_pandemic_by_country_and_territory

https://en.wikipedia.org/wiki/COVID-19_pandemic_deaths

50 | P a g e

5. Computer Software business and others

6. Entertainment (Amusement Parks, Cinema hall, Cultural matters)

7. Hotels, motels, resorts, shops and establishments

8. Private hospitals

9. Public transport

10. Railways

11. Waterways

12. Electronic and print media

13. Small & informal micro business

14. Tailoring shops

15. Barber shops

Research methodology

Since the Economic injuries caused by deadly COVID-19 Pandemic and the research is often

geared towards using past events to examine current situation and to predict future situation, so a

mixture of Experimental Research & Historical Research methodology has been used which is

mainly based on secondary data.

Bangladesh Economy – overview

In spite of various national and international adverse situations, Bangladesh has been able to

continue her economic development and high growth trend. In the 7th Five Year Plan, it is

projected to achieve GDP growth rate 8 percent by 2020. However, Bangladesh has achieved the

target approximately two years prior to the stipulated time. According to the initial estimation of

Bangladesh Bureau of Statistics, the GDP growth of FY2018-19 stood at 8.13 percent. At

present, the average per capita national income is US$1,909 which was US$1,751 in FY2017-18.

The government led by Honorable Prime Minister Sheikh Hasina after assuming office in 2009

had declared the special initiative ‘Vision 2021’ to graduate Bangladesh to a middle income

country by 2021. This breakthrough decision raised Bangladesh in a unique position to the

world. Meanwhile, Bangladesh has achieved all the eligibility conditions to graduate to a

‘developing country’ from a ‘least development one’. It is expected that continuing this pace of

socio-economic development, Bangladesh will be transformed into the desired middle-income

country within the stipulated time.

The government is executing planned tax management programs to raise national income. The

Online Value Added Tax system is going to start from the upcoming fiscal year. The size and

allocation of national budget and Annual Development Program (ADP) has been increased

gradually. In FY2017-18, total amount of revised budget was Tk.3,71,494 crore which has

increased by Tk.71,047 crore to Tk.4,42,541 crore in the current fiscal year. Similarly, the

Revised Annual Development Program (RADP) has been increased by 12.54 percent from the

previous fiscal year and stood at Tk.1,67,000 crore. The investment-friendly monetary policy is

being implemented to maintain inflation to a comfort level. Export earnings and foreign

exchange reserves are increasing every year. On 17 April 2019, foreign exchange reserve

reached US$32.1 billion.

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Bangladesh has made significant progress not only in economic development but also in social

sectors. Bangladesh achieved hunger, poverty and health sector related goals and targets of

Millennium Development Goals (MDGs) before the scheduled time.

As a result, Bangladesh achieved UN ‘South South Award’ twice. At present, the government is

working relentlessly to implement Sustainable Development Goals (SDGs). Allocation and

beneficiaries of social safety-net program have been enhanced every year. In addition, new areas

of social safety-net are being added. Rate, incidence and depth of poverty have been decreasing

continuously because of following the life cycle approach of social safety-net program. 40

percent people of the country were lived below the poverty line in 2005. By just one era, the

poverty rate reduced to 21.8 percent in 2018. By continuing this trend, it would be possible to

fulfill the target to reduce poverty rate at 18.6 percent by 2020.

Bangladesh has progressively improved in human resources development, gender equality,

private sector and environmental development sectors. According to ‘Global Gender Gap Report,

2018’ published by World Economic Forum; Bangladesh is at the top in South Asia in terms of

gender equality. Moreover, Bangladesh is at the top position around the world in four indicators

i.e. ‘girls-boys enrolment rate at primary level’, ‘girls-boys enrolment at secondary level’, ‘years

with female head of state’ and ‘sex ratio at birth’. Child and maternal mortality rate has

decreased gradually due to proper initiatives of the government. Now, average life expectancy is

72 years. The government has decided to establish 100 ‘Economic Zones’ across the country

with a view to encouraging private and direct foreign investment. Until March 2019,

administrative approval has been given to establish 88 ‘Economic Zones’. The government is

working relentlessly to mitigate the climate change. The government has formed Bangladesh

Climate Change Trust Fund (BCCTF) by its own resources.

Bangladesh is the pioneer to establish such type of fund among the Least Developed Countries

(LDCs). Up to March 2019, the government has allocated a total of Tk. 3,500 crore to this fund

and a total of 687 projects under BCCTF have been approved until December 2018.

Furthermore, a long-term integrated mega plan ‘Bangladesh Delta Plan2100’ has been

formulated to combat climate change impact.

Overall effect on the economy

Bangladesh’s economy will be significantly impacted by the COVID-19 pandemic. The decline

in national and global demand for manufactured goods, particularly in the garment sector, risks

creating unemployment and deepen poverty. The urban poor will be hardest hit while the number

of additional poor will be higher in rural areas. The national shutdown will impact private

consumption. While growth is expected to recover over the medium term, downside risks

remain, particularly from a domestic outbreak of COVID-19 and fragilities in the financial

sector.

“The extent of the impact of the pandemic will depend on the duration of the crisis and the

mitigation measures taken,” said Mercy Tembon, World Bank Country Director for Bangladesh

and Bhutan.

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The impact of the pandemic will hit hard low-income people, especially informal workers in the

hospitality, retail trade, and transport sectors who have limited or no access to healthcare or

social safety nets. The report notes that the COVID-19 shock will likely reinforce inequality in

South Asia. As played out across the region, the sudden and large-scale loss of low paid work

has driven a mass exodus of migrant workers from cities to rural areas, spiking fear that many of

them will fall back into poverty. While there are no signs yet of widespread food shortages, the

report warns that a protracted COVID-19 crisis may threaten food security, especially for the

most vulnerable.

COVID-19 impact and the world economy in eight charts by RAPID:

The first case of COVID-19 (Coronavirus) was reported in Wuhan, China, in late December 2019. As of

31 May, 2020, over 6.2 million COVID cases were reported in over 200 countries and territories around

the world. Until that date, the virus killed over 3,71,000 people worldwide, with the highest number of

deaths – over 1,05,000 – being reported in the United States.

The COVID-19 pandemic is causing an

unprecedented disruption to the global economy.

The resultant socio-economic impact is being

transmitted through different channels. The

International Monetary Fund (IMF) warned that the

pandemic might push the global economy into the

worst recession since the Great Depression of the

1930s, and far worse than the one triggered by the

Global Financial Crisis in 2008-09, with the poorest

countries being the hardest hit. As per IMF

projections, the global economy would contract by

3.0 per cent in 2020, while the World Bank thinks

the global economy will decline by 2.1-3.9 per cent.

Using simulations from a general equilibrium

Global trade contracted by 3.0 per cent in the first

quarter of 2020. According to the UNCTAD, the

downturn would accelerate in the second quarter

and so the world trade would decline by 27 per

cent. This is echoed by the World Trade

Organization (WTO), which has projected that the

world merchandise trade would shrink between 13

and 32 per cent in 2020.

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modelling exercise, the Asian Development Bank

(ADB) derives that the global economy could lose

between $5.8 trillion and $8.8 trillion – equivalent

to 6.4 per cent to 9.7 per cent of the global gross

domestic product (GDP).

The COVID-19 pandemic is expected to cause huge

job losses for migrant workers and thus affect

remittance flows. According to the Institute for

Public Policy Research, migrant workers are

particularly likely to work in accommodation and

food services, one of the most affected sectors in the

COVID crisis. The World Bank projections found

that global remittance flows would decline sharply

by 20 per cent in 2020. Europe and Central Asia

will experience the largest fall of 27.5 per cent,

followed by Sub-Saharan Africa (23.1 per cent),

South Asia (22.1 per cent), the Middle East and

North Africa (19.6 per cent), Latin America and the

Caribbean (19.3 per cent), and East Asia and the

Pacific (13 per cent).

Worldwide FDI flow is expected to drop by about

35 per cent due to travel bans, disruption of

international trade, and wealth effects of declines in

the stock prices of multinational companies.

About 94 per cent of the world’s employed

workforce are living in countries with some sort of

workplace closure measures in place while around

one-fifth of them live in countries that have closed

all workplaces apart from those deemed essential.

The decline in working hours around the world in

the first quarter of 2020 is equivalent to

approximately 135 million full-time jobs losses,

which would increase to 305 million in the second

quarter. The crisis is hitting young workforce,

especially young women, more severely than any

other group. The International Labour Organization

(ILO) survey found that more than one in six young

people have stopped working since the onset of the

crisis. Young people who remain employed

experienced a 23 per cent cut in their working

hours.

54 | P a g e

The COVID-19 pandemic is likely to cause an

increase in global poverty for the first time since

the 1990s. According to a UNU-WIDER estimate,

the number of people living in poverty could

increase by 420–580 million. The World Bank

estimates that the share of the population living in

extreme poverty (incomes less than $1.90 per day)

will rise by 40-60 million. The United Nations,

however, put the number in the range of 84–132

million. According to the Save the Children and

UNICEF, the COVID-19 pandemic could push an

additional 86 million children into household

poverty by the end of 2020.

The world could see the number of hungry people

double in the aftermath of this crisis, as per the

World Food Programme (WFP). As per the Global

Report on Food Crises, there were 135 million

people in acute food insecurity in low and middle-

income countries last year. That figure could

almost double to reach 265 million in 2020.

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Prices of primary commodities plummeted in the first quarter of 2020. UNCTAD's free market

commodity price index (FMCPI), which measures the price movements of primary commodities

exported by developing economies, declined by a whopping 20 per cent in March. This is the highest

fall in commodity prices in recent history with the comparable figure during the global financial crisis of

2008 when it was around 18 per cent. Quite strikingly, the prices of crude oil became negative in April,

which however recovered in May.

COVID-19 led Stimulus Packages by GoB

The economic loss of COVID-19 is yet to be demarcated, but it is quite probable that our businesses are

about to take a heavy toll of this pandemic. It is estimated that the lockdown has obstructed the livelihood

of 85% of the country’s working population. 50% of the household in the country lost at least one third of

their income within the first ten days of government lockdown. The country’s GDP is also probable to

decline by 3-4% on account of the pandemic. To safeguard businesses from COVID-19 shock, GoB has

so far announced 19 stimulus packages worth of BDT 103,117 crore (USD 12.28 bn), which is 3.7% of

the GDP.

56 | P a g e

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Challenges in implementing Stimulus package

Over reliance on banks to implement the stimulus package might prove inappropriate –

Government has sought help of the banking channel to implement the stimulus package. The

funds from the stimulus package will be distributed through the banking channel; while both

credit and collection risk lies with the banks. Our banks are already overburdened with non-

performing loans and poor collections. Banks need mitigate credit risk before disbursing any

fresh aids which would help them to tackle the escalating NPL.

Interest subsidy to help borrowers, concern remains over habitual non-payment - The

government has decided to provide the interest amounting to BDT 2,000 crores to the banks as a

58 | P a g e

subsidy and it is estimated to benefit nearly 13.8 million loan recipients. But it is also probable

that the habitual nonpayers would likely fetch benefit from this stimulus package which would

make the current package inexpedient.

Potential effect on these sector due to COVID-19

Gross Domestic Product (GDP) at Current Market Prices (estimated)

Table_1 2018-19 20119-20 2020-21

(In Crore

Tk.)

% of

GDP

(In Crore

Tk.) % of GDP

(2018-19) (In Crore

Tk.)

% of

GDP

(Based on

LY)

Capital Market

94,265 3.72% 101,052 3.72%

106,307 3.72%

Trade & Commerce

321,204 12.66%

344,331 12.66%

362,236 12.66% Supply chain

Supply Chain System

Entertainment (Amusement Parks,

Cinema hall, Cultural matters)

25,280 1.00%

27,100 1.00%

28,509 1.00%

Hotels, motels, resorts, shops and establishments

Private hospitals

Public transport

225,438 8.89%

241,670 8.89%

254,236 8.89% Railways

Waterways

Small & informal micro business

82,188 3.24%

88,106 3.24%

92,687 3.24%

Computer Software business and

others.

Electronic and print media

Tailoring shops

74,828 2.95%

80,216 2.95%

84,387 2.95%

Barber shops

Informal works (like daily casual labor, rickshaw and auto rickshaw

polar, private tutor, hawkers,

fishermen, electrician, blacksmith, etc.).

Sector Total

823,203 32.46%

882,474 32.46%

928,362 32.46%

Per Day

2,286.68

2,451.32

2,579

Per Month

68,600.25

73,539

77,364

Total GDP at current Market

Price

2,536,177 100.00%

2,718,782 100.00%

2,860,158 100.00%

59 | P a g e

GDP % 8.13% 7.20% 5.20%

Forecasted by WB GoB (revised)

Source: Bangladesh Economic Review 2019 Source: Daily Star Source: Daily Star

Particulars

Year

2018-19 2019-20 2020-21

GDP % (In Crore

Tk.) GDP %

(In Crore

Tk.) GDP % (In Crore Tk.)

Total GDP Growth

and Value at current

Market Price 8.13% 2,536,177

GoB projected GDP 8.20% 2,744,144 8.15% 2,967,791

World Bank projected

GDP 2.80% 2,820,980

GoB projected GDP

(Revised) 5.20% 2,886,839


GDP 7.20% 2,718,782 8.15% 2,940,362


GDP - 2.80% 2,794,908

GoB projected GDP

(Revised) 5.20% 2,860,158

Sectors Scenarios % of

GDP (In Crore Tk.)

Concern Sectors Total

@ GDP growth 8.20% in 2019-20 and 8.15% in 2020-

21 42.73% 1,268,237

@ GDP growth 8.20% in 2019-20 and 2.80 % in 2020-

22 42.73% 1,205,500


23 42.73% 1,233,644

Minimum economic

injury (1,268,237-1,205,500) 62,738

Per day (62,738/360) 174.27

Sectors Scenarios % of

GDP (In Crore Tk.)

Concern Sectors Total

@ GDP growth 7.20% in 2019-20 and 8.15% in 2020-

21 42.73% 1,256,516


22 42.73% 515,151


23 42.73% 26,810

Minimum economic

injury (1,256,516-515,151) 741,365

Per day (741,365/360) 2,059.35

60 | P a g e

Recommendations

Bangladesh and other South Asian governments must ramp up action to curb the health

emergency, protect their people, especially the poorest and most vulnerable, and set the stage

now for fast economic recovery, says the World Bank in its twice-a-year-regional update.

Released today, the latest South Asia Economic Focus anticipates a sharp economic slump in

each of the region’s eight countries, caused by halting economic activity, collapsing trade, and

greater stress in the financial and banking sectors.

In this fast-changing and uncertain context, the report presents a range forecast, estimating that

regional growth will fall to a range between 1.8 and 2.8 percent in 2020, down from 6.3 percent

projected six months ago. That would be the region’s worst performance in the last 40 years,

with temporary contractions in all South Asian countries. In case of prolonged and broad

national lockdowns, the report warns of a worst-case scenario in which the entire region would

experience a negative growth rate this year.

This deteriorated forecast will linger in 2021, with growth projected to hover between 3.1 and

4.0 percent, down from the previous 6.7 percent estimate.

“The priority for all South Asian governments is to contain the virus spread and protect their

people, especially the poorest who face considerably worse health and economic outcomes,” said

Hartwig Schafer, World Bank Vice President for the South Asia Region. “The COVID-19 crisis

is also an urgent call-to-action moment to pursue innovative policies and jumpstart South Asian

economies once the crisis is over. Failure to do so can lead to long-term growth disruptions and

reverse hard-won progress in reducing poverty.”

Bangladesh’s economy will be significantly impacted by the COVID-19 pandemic. The decline

in national and global demand for manufactured goods, particularly in the garment sector, risks

creating unemployment and deepen poverty. The urban poor will be hardest hit while the number

of additional poor will be higher in rural areas. The national shutdown will impact private

consumption. While growth is expected to recover over the medium term, downside risks

remain, particularly from a domestic outbreak of COVID-19 and fragilities in the financial

sector.

“The extent of the impact of the pandemic will depend on the duration of the crisis and the

mitigation measures taken,” said Mercy Tembon, World Bank Country Director for Bangladesh

and Bhutan. “The Bangladesh government has acted quickly with public health directives,

stimulus package, and scaled-up social protection programs. Earlier this month, the World Bank

approved a $100 million financing to help detect, prevent, and respond to the COVID-19

61 | P a g e

outbreak and protect the people. We are committed to help Bangladesh tackle the pandemic,

accelerate recovery, and build resilience.”

The impact of the pandemic will hit hard low-income people, especially informal workers in the

hospitality, retail trade, and transport sectors who have limited or no access to healthcare or

social safety nets. The report notes that the COVID-19 shock will likely reinforce inequality in

South Asia. As played out across the region, the sudden and large-scale loss of low paid work

has driven a mass exodus of migrant workers from cities to rural areas, spiking fear that many of

them will fall back into poverty. While there are no signs yet of widespread food shortages, the

report warns that a protracted COVID-19 crisis may threaten food security, especially for the

most vulnerable.

In the short term, the report recommends preparing weak healthcare systems for greater COVID-

19 impacts, as well as providing safety nets and securing access to food, medical supplies, and

necessities for the most vulnerable. To minimize short-term economic pain, the report calls for

establishing temporary work programs for unemployed migrant workers, enacting debt relief

measures for businesses and individuals, and easing inter-regional customs clearance to speed up

import and export of essential goods.

Once lockdown restrictions are loosened, South Asian governments should adopt expansionary

fiscal policies combined with monetary stimulus to keep credit flowing in their economies. Since

many South Asian countries have limited fiscal space, these policies should target people worst

hit by the freeze on economic activity. The report urges governments to adopt temporary

spending measures and coordinate with international financial partners to avoid unsustainable

long-term debt levels and fiscal deficits.

“After tackling the immediate COVID-19 threat, South Asian countries must keep their

sovereign debt sustainable through fiscal prudence and debt relief initiatives,” said Hans

Timmer, World Bank Chief Economist for the South Asia Region. “And looking beyond the

present crisis, lie great opportunities to expand digital technologies for payment systems and

distant learning to unlock remote areas in South Asia.”

Due to the COVID-19 pandemic, economic circumstances within countries and regions are fluid

and change on a day-by-day basis. The analysis in the report is based on the latest country-level

data available as of April 7, 2020.

The World Bank Group is taking broad, fast action to help developing countries strengthen their

pandemic response, increase disease surveillance, improve public health interventions, and help

the private sector continue to operate and sustain jobs. It is deploying up to $160 billion in

financial support over the next 15 months to help countries protect the poor and vulnerable,

support businesses, and bolster economic recovery.

62 | P a g e

Conclusion

Bangladesh is a developing nation. Natural disasters due to climate changes are very common

and frequent. The economy is often faces natural disasters arising out of floods, cyclones, etc.

Bangladesh is widely on RMG sector and foreign remittances. Due to COVID-19 pandemic,

RMG exports reduced badly and it is not likely to improve soon. Subsidies can work to save the

situation, but these cannot be continued for an indefinite time.

References:

1. https://www.worldometers.info/coronavirus/#countries

2. https://en.wikipedia.org/wiki/COVID-19_pandemic

3. https://mof.portal.gov.bd/sites/default/files/files/mof.portal.gov.bd/page/f2d8fabb_29c1

423a_9d37_cdb 500260002/1.%20Cover%20page.pdf

4. https://www.worldbank.org/en/news/press-release/2020/04/12/bangladesh-must-act-now-to-


5. https://home.kpmg/xx/en/home/insights/2020/04/bangladesh-government-and-institution-

measures-in-response-to-covid.html

6. https://thefinancialexpress.com.bd/economy/covid-19-impact-and-the-world-economy-in-

eight-charts-by-rapid-1591098739

7. https://tbsnews.net/economy/budget/govt-sets-ambitious-52-gdp-year-82-next-year-91858

8. https://www.thedailystar.net/business/economy/bangladesh-gdp-fy-2019-20-will-be-over-7-

pct-world-bank-1811878

9. https://www.worldbank.org/en/news/press-release/2020/04/12/bangladesh-must-act-now-to-


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